What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
However, the listed processor has unveiled a plan to return to profitability this financial year.
Synlait has reported a loss of $28.5 million for financial year 2021 (FY21) compared to $75m profit the previous year.
In a statement to NZX, Synlait says FY21 proved to be very challenging.
“After nine straight years of solid profitability we are disappointed to post our largest ever financial loss.
“The shape of our business changed dramatically in December following The a2 Milk Company’s large forecast volume reduction, which meant inventory levels and demand outlook had to be reset.
“During the last quarter of FY21, the board and management team built a clear and accurate picture of Synlait’s current performance in the context of changes over the past five years, and has begun to execute a plan to rebuild.”
Synlait expects its net profit after tax result to return to robust profitability in FY22.
This is based on a return to normal trading conditions and tighter management of its ingredient business and improved infant base powder volumes.
It also expects a growing contribution from its liquids and consumer foods business units and targeted and significant cost savings from Synlait, Dairyworks and Talbot Forest Cheese.
