Synlait’s profit falls 76%

A2 Milk’s sole infant formula supplier, Synlait Milk, said its half-year profit slumped by 76 per cent to $6.4 million, driven by Covid-19 disruption, and said it expected to be “broadly breakeven” in the full year.

The full-year outlook has worsened since December when the company said it expected the 2021 profit to be half that of 2020’s $75.2m.

This month Synlait withdrew that December guidance due to uncertainty and volatility within its business.

Its revenue gained 19 per cent to $664.2m while ebitda fell 29 per cent to $47.7m.

Chairman Graeme Milne said it was a challenging first half, “and we continue to find ourselves in a period of significant uncertainty and volatility as Synlait faces into several headwinds”.

A2 Milk — Synlait’s biggest customer — has been hit hard as Covid has severely curtailed the important “daigou” unofficial trade channels into China.

Synlait said uncertainty was affecting its short-term operations and would hit the full year’s financial result.

Chief executive Leon Clement said its focus was on mitigating Covid’s impact on its customers.

“We will need time to get through this, but we remain confident about our future.”