Synlait Milk, a dairy supplier based in New Zealand, has announced that it anticipates higher earnings in the fiscal year 2024, despite challenges such as sluggish dairy demand in China and ongoing cost pressures.
In the 12 months leading up to July, Synlait reported a 31% decrease in earnings before interest, tax, depreciation, and amortization (Ebitda), amounting to NZ$90.7 million (US$54.0 million). Annual revenue from continuing operations also declined by 5% to NZ$1.32 billion. As a result, the company decided not to pay a final dividend.
Synlait attributed its poor financial performance to various factors, including a reduction in customer demand, carbon-dioxide shortages, extreme weather events, the Covid-19 pandemic, and inflationary impacts on its cost base. However, the dairy supplier remains optimistic about the future.
Looking ahead to the 2024 fiscal year, Synlait acknowledges that it may continue to face challenges from the Chinese market dynamics, global economic conditions, and inflationary pressures impacting its cost base. These factors could potentially impact customer demand and overall profitability.
Despite these challenges, Synlait projects continued growth in Advanced Nutrition volumes at its Pokeno site in fiscal year 2024. Additionally, the company expects an improvement in Ebitda performance compared to fiscal year 2023.
Synlait also expressed its disagreement with a2 Milk’s recent decision to terminate their exclusive manufacturing and supply rights for certain infant milk formula products. This disagreement will prompt negotiations between the companies and potentially lead to arbitration proceedings.
In conclusion, Synlait Milk remains hopeful about its financial prospects moving forward, aiming for higher earnings in the fiscal year 2024 despite prevailing challenges.
