- Share prices in Synlait Milk have tumbled 10.2 per cent on the ASX today after the company missed its targeted growth in revenue
- The company saw a 10 per cent rise in profits from the 2018 FY, but analysts predicted the company would enjoy profit increases of up to 18 per cent
- Uncertainty surrounding Synlait’s decision to continue development of the Pokeno production plant resulted in a share price freefall.
Share prices in Synlait Milk have tumbled 10.2 per cent on the ASX today after the company missed its targeted growth in revenue.
While the annual figures have drawn praise for the dual-listed dairy company, net profits still fell short of analyst’s predictions. Researchers like Morgans forecast the company would enjoy profit increases of up to 18 per cent.
In a statement explaining its 2019 FY results, the company surpassed a landmark $1 billion revenue ceiling and increased net profits by 10 per cent to NZ$82.2 million. But the uncertainty surrounding Synlait’s decision to continue development of the Pokeno production plant resulted in a share price freefall.
In spite of today’s market stats, Synlait’s revenue boost was well represented with a 21 per cent increase in baby formula sales and a 15 per cent increase in powder and soft cream figures.
Synlait CEO Leon Clement said the report indicated strong financial results, future-focused investment strategy and a clear sense of direction.
“The pace and quality at which our team delivered these four major growth projects, while continuing to support our current customers to grow, and improve existing operational efficiencies is truly impressive,” Leon said.
“Not only have we built new facilities, but we have brought in capable, experienced and high-energy people to run them. Building strong teams across all our Synlait sites, and ensuring we have the right balance of skills has been critical,” he concluded.
Synlait’s baby formula plant is currently under construction and continues to be dogged by legal battles, with the company’s right to commission the factory still under question.
Neighbouring landowner and lawsuit plaintiff, Qing Ye, won an appeals case against the company in May and succeeded in getting the land covenants reinstated. But Synlait has since acquired a further appeal to the Supreme Court with a hearing scheduled for October this year.
If the two parties do not reach a settlement, Qing will have to file an injunction and suspend the factory’s operations in order to put an end to the development.
“We are technically in breach of the covenant now, even as we build on the land. Starting to run it and commission it doesn’t change that situation” said Leon of the Pokeno plant’s commission.
Shares in Synlait are down 12 per cent at market close, worth A$8.00 apiece in a $1.63 billion market cap.