South Island dairy company Synlait Milk is back in the black as its ingredients division posted higher-than-usual sales, while major customers readjusted their inventory levels.
Key figures for the 12 months to July compared to a year ago:
- Net profit of $38.5 million vs loss of $28.5 million
- Earnings $1.66b vs $1.37b
- Total average payout $9.59 vs $7.82
- 2023 Payment Forecast $9.50/kg milk solids
Sinlate chairman John Penno said last year was a “critical period of refocusing.”
“We are committed to rebuilding our earnings, reducing unnecessary costs, freeing up working capital and reducing capital expenditures while building scale and capacity in the most profitable segments available to the New Zealand dairy industry. I’ve been focusing.
“Our ingredients business returned to historic profitability and our nutrition business returned to growth, while continuing to invest in customer development across all business lines.”
The company made a one-off gain of $11.9 million from the sale and leaseback of land and buildings in Oakland.
Synlait posted its biggest ever loss in 2020/21 as orders for infant formula from its main customer A2 Milk dropped significantly.
The rebalancing of inventories from A2 Milk means that the 2021/22 product mix will be heavily dependent on the ingredients business, Sinleit said.
Ingredients gross margin increased $43 million to $57.5 million on sales up 5 percent.
Nutrition sales were down 2%, primarily due to A2 milks adjusting inventory levels.
However, increased production of infant formula base powders to recoup manufacturing overhead costs increased nutritional gross margins by nearly two-thirds to $70 million.
Nutrition margins also benefited from cost reductions, the company said.
CEO Grant Watson said Synlait is well positioned as it enters its second year of recovery.
“In the face of a difficult trading environment, we are pleased to see the results of our financial and strategic review realized sooner than expected.
“By continuing to strengthen our foundation in the coming year, we will continue to improve our financial performance for our shareholders and make Synlait a great place to work for our team,” said Watson.
https://www.rnz.co.nz/news/business/475555/synlait-posts-38-point-5m-annual-profit Synlait posts annual profit of $38.5 million