A Synlait milk truck. File picture. Photo: Synlait/supplied
Troubled dairy company Synlait Milk has slumped to a large loss after a large asset write down, as it struggled with huge debt, money losing operations, and business disputes.
Key numbers for the year ended July compared with a year ago:
- Net loss $182.1m vs loss $4.1m
- Revenue $1.64bn vs $1.60bn
- Impairment $114.6m (North Island factories)
- Milk payout/kilo milk solids $8.11 vs $8.49
- No dividend
Synlait chief executive Grant Watson said the company had turned a corner with the approval of a $218 million rescue package from its two biggest shareholders, Bright Dairy and a2 Milk, and new banking arrangements that will allow it to pay back debt.
"Synlait began FY24 (financial year 2024) with too much production capacity, unsustainably high levels of debt, significantly higher interest rates, and sharply declining demand for infant formula at a macro level."
"Although those challenges are evident in the year's result, we begin FY25 with new momentum and a stronger financial foundation."
He said the priority now was to win back the confidence and commitment of its farmer suppliers, most of whom had given notice to stop supplying Synlait.
Watson said the farmers wanted Synlait to cut its debt and improve payments, which the package of measures had delivered.
"Providing farmer suppliers with compelling reasons to remove cessation notices is a top priority, ensuring we have the secure milk supply to underpin our business recovery."
Suppliers withdrawing their cease notice and committing to supply for the coming season would be paid a one off incentive payment of 20 cents a kilo of milk solids based on this year's production.
"That 20 cent incentive payment, we believe will be a compelling offer to actively withdraw those cease notices so that we get on and do business."
Watson said Synlait was on a sound footing and its various businesses, including Dairy Works and its North Island processing plant at Pokeno, would concentrate on improved sales and new products for new markets beyond its staple product of infant formula for a2 Milk.
