Milk manufacturer Synlait has slumped into a deep loss following asset rewriting, farmer negotiations and a rocky financial year.
Synlait Milk has reported a major NZD $182.1 million loss for the July year, despite promising to look forward to a brighter future.
Described as a “really poor” result by chief executive Grant Watson, much of the loss is attributable to a NZD $114.6 million loss non-cash impairment of its North Island assets, including its processing plant at Pōkeno.
The company has recently undergone a major restructuring of its balance sheet, which indicated that revenue was up by two percent at NZD $1.64 billion.
Synlait board representatives said the past 12 months had been unprecedented, and that the financial year could be described as deleveraging.
The board’s decision and its changes have been driven by Synlait’s need to reduce debt to more manageable levels.
Synlait began 2024 over production capacity, according to a spokesperson. It also had unsustainably high levels of debt, significantly higher interest rates and sharply declining demand for infant formula.
Despite the drastic loss, the company is still committed to beginning 2025 off with a refreshed momentum and a financially stronger foundation.
The company has recently experienced a turbulent period with its relationship with farmers. In the face of a farmer revolt, Synlait said it would offer $0.20c per kilogram of milk solids to South Island farmers, whereas North Island farmers would only get $0.5c per kilogram.
A spokesperson said that farmers have been clear in their expectations for Synlait to reduce its debt levels while still paying a competitive milk price and strong advance rates.
Although Synlait has had a trusted relationship with farmer suppliers through the years, it acknowledged that it will now need to work hard in order to regain confidence.
It was reported in May that a significant majority of farmer suppliers to Synlait were issued with cessation notices.
Restructuring within the company has also been undertaken, including a NZD $130 million shareholder loan from tis majority shareholder Bright Dairy as well as being issued NZD $217.8 million of new equity capital.
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