Synlait Milk anticipates a net loss of between $NZ77 million and $NZ82 million for the half-year ending January 31. The dairy processing company said its financial performance was significantly impacted by unresolved manufacturing issues at its Dunsandel plant, coupled with margin pressures stemming from increased raw milk sales. Synlait specialises in processing milk and manufacturing dairy products, including infant formula and cheese, for local and international markets. It is a major player in New Zealand’s dairy sector.
The company attributed the expected loss to manufacturing challenges that necessitated substantial adjustments to production schedules this season. These adjustments resulted in the need to rebuild inventory, which led to a higher volume of lower-margin commodity sales. Furthermore, these operational changes contributed to elevated operating costs throughout the period.
In response to its financial situation, Synlait is moving forward with the sale of its North Island assets, slated for completion in April. The proceeds from this sale are intended to reduce the company’s debt and facilitate a financial reset focused on its operations in Canterbury. While Synlait anticipates that this strategic move will help stabilise its financial position, the company has cautioned that a full recovery will require a considerable period.
Synlait is actively working to address the manufacturing inefficiencies and optimise its operational processes to mitigate further losses. The company’s leadership team is focused on implementing strategies to improve profitability and rebuild investor confidence as it navigates these challenging conditions.
