Synlait Publishes Half Year 2023 Result

Synlait Milk Limited (Synlait) has published its financial result for the six months ended 31 January 2023.

Please find the following materials attached:

1. Synlait H1 23 Announcement
2. Synlait H1 23 Chair & CEO Review
3. Synlait H1 23 Financial Statements
4. Synlait H1 23 Investor Presentation
5. NZX Results Template

Results at a glance:

• Revenue down 3% to $769.8 million.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) down 25% to $51.5 million.
• Adjusted EBITDA down 5% to $55.0 million.
• Net profit after tax (NPAT) down 83% to $4.8 million.
• Adjusted NPAT down 43% to $8.9 million.
• Net debt up 32% to $518.6 million.
• Gross profit up 18% to $81.7 million.
• Forecast base milk price for 2022 / 2023 season remains at $8.50/kgMS.

Full Year 2023 guidance statement:

Synlait’s full year 2023 (FY 23) net profit after tax (NPAT) guidance range is $15 million to $25 million.

The key drivers of this guidance range are as follows:

• Advanced Nutrition forecast demand and production has been reduced or delayed following forecast changes by Synlait’s largest customer during H1 23 and more recently by other customers.
• Operational stability and cost challenges are evident across Synlait, including a reduction in milk processed, raw material supply challenges, CO2 shortages, an extremely tight labour market, extreme weather events, and high inflationary costs pressures.
• ERP stabilisation challenges. As signalled in December, implementing and stabilising SAP significantly impacted Synlait’s ability to release and ship products to customers in Q1 FY 23. The flow-on effects resulted in higher inventory levels and costs, including interest costs.

Other business unit performance update:

• The performance of Synlait’s Ingredients and Consumer businesses remain strong. Combined, the business units will contribute more than in FY 22.
• The Ingredients business will not experience the one-off foreign exchange gains experienced in FY 22. While volume is down on FY 22, the business unit will benefit from a highly favourable stream return from the skim milk powder, AMF and cream product mix in FY 23.
• The Consumer business continues to navigate high milk and cheese commodity prices and expansion into overseas markets. The business unit has performed well due to favourable movements in underlying price mechanisms and higher plant utilisation.
• In the Foodservice business, sales volumes of Foodservice UHT cream to China are forecast to steadily ramp up in the second half of FY 23. Customer feedback and demand outlook is positive.

Synlait continues to manage several risks, including, but not limited to, the SAMR re-registration timeline and supporting activities, the onboarding timeline for Synlait Pokeno’s new multinational, UHT volume ramp up, a tight labour market, and high inflationary cost pressures. These factors could impact Synlait’s current guidance.

Synlait will look to provide a further update on its performance and outlook on 8 May 2023 at its Investor Day.

Webcast details:

Synlait will hold a briefing on the results at 11:00am (NZ time). Participants can register here:

https://s1.c-conf.com/diamondpass/10028017-gdte43.html

For further information contact:

Hannah Lynch
Head of Strategy & Corporate Affairs
P: +64 21 252 8990
E: [email protected]

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Announcement PDF