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Synlait Milk (ASX:SM1) - CEO, John Penno - The Market Herald
CEO, John Penno
Source: NZME via NZ Herald
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  • Dairy company Synlait Milk (SM1) has slashed its earnings guidance for 2021 as the fallout from the pandemic continues to hinder its operations
  • Its board cited ongoing shipping delays, which it said would likely result in the "sale of some ingredient products occurring post the FY21 balance date"
  • As a result Synlait expects to record a loss of between NZ$20 million and NZ$30 million (between A$18.56 million and A$27.84 million)
  • The revisal also follows the resignation of former CEO Leon Clement and CFO Angela Dixon in April and May, respectively
  • Shares in Synlait Milk finished trading last week at $2.99 each.

Dairy company Synlait Milk (SM1) has slashed its earnings guidance for 2021 as the fallout from the pandemic continues to hinder its operations.

Having recently undertaken a review of certain risks to performance, Synlait's Board cited ongoing shipping delays, which it said would likely result in the "sale of some ingredient products occurring post the FY21 balance date".

Lower than usual prices are also expected to be seen for these ingredient products due to a combination of sales phasing and volume pressure, while a more conservative approach to year-end inventory volumes and valuation will only add to the issue.

As a result, Synlait expects to record a loss of between NZ$20 million and NZ$30 million (between A$18.56 million and A$27.84 million), compared to a profit of NZ$75.2 million (roughly A$69.79 million) last year.

"I am disappointed to share this news with our investor base," said chief executive John Penno.

"As a team we are focused on closing out this year as well as we can, then resetting, and delivering a much-improved financial performance in FY22."

The news follows a separate announcement earlier this year from A2 Milk — a significant customer and key shareholder of Synlait — which cut its 2021 revenue target from $1.25 billion to $1 billion due to disruptions to its "daigou" channel.

Daigou trading, where people buy products for Chinese consumers and import them informally to the mainland, make up a significant chunk of A2's earnings.

Synlait's revisal also follows the resignation of former CEO Leon Clement and CFO Angela Dixon in April and May, respectively, after the company withdrew its 2021 guidance entirely in March.

Shares in Synlait Milk finished trading last week at $2.99 each.

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