OPINION: Your old mate reckons Fonterra and its dairy farmer shareholders may well be all cock-a-hoop about the prospects of a near $8 payout this year and one north of $8 next year.
The nation’s third-largest dairy company wrote to its shareholders this week that it has adopted the Government’s strategy to ‘flatten the curve’.
Synlait says it has taken steps to restrict all people movements wherever possible, reviewing all roles for their suitability to work from home and keeping their China office closed.
“While we can confirm there has been no material short-term impact on our financial performance in connection with Covid-19, it represents some downside risk going forward.
“This was a factor in Synlait’s decision to issue a wider guidance range back in February.
“Demand indications from The a2 Milk Company suggest Covid-19 had a positive impact on consumer-packaged infant formula sales in the first two months of the 2020 calendar year, however the company was unable to quantify the FY20 impact,” Synlait wrote to its Shareholders.
Synlait says it has experienced no significant operational impact, but the company is seeing pressure on its broader supply chain, particularly in relation to space availability and shipping schedules.
Synlait says its team is “working closely” with logistic partners to assist in understanding capacity and scheduling.
“As New Zealand’s largest infant nutrition manufacturer, Covid-19 concerns us greatly and our incident assessment team is reviewing the situation and updating our response daily.
“We are deeply committed and connected to China, the customer partnerships we have there, and the role that we play in providing infant nutrition to many families across China.”