Synlait Milk Limited’s (ASX: SM1) Stock Plunged On ASX Despite The Positive FY18 Earnings

On 19 September 2018, Synlait Milk Limited (ASX: SM1) announced its annual result for FY2018 for the year-end 31 July 2018. The company’s earned revenue of $879 million which is around $120.0 million higher than previous year revenue of $758.994 million. This 15.8% gain is reflecting an increase in high-value consumer packaged infant formula sales as well as an increase in dairy commodity prices. EBITDA is $138.6 million in FY 2018 which increased 56.1% compared to last year. This increase in EBITDA was driven by the improved margins in the fiscal year 2018. Profit before income tax is $103.810 million in FY2018 which was $55.380 million a year ago. Net profit after tax for the year is $74.553 million which was $39.530 million a year ago. Basic and diluted earnings per share were 41.60 cents against 22.82 cents a year ago. Net cash inflow from operating activities is $98.390 million which is $16.8 million less than the previous year. Total net debt is $114.9 million in FY2018 which was $82.6 million a year ago. Earnings before net finance costs and income tax were $113.085 million which was $67.593 million a year ago. The primary reason for this reduction was associated with the increase in inventory holdings at year-end. Return on net operating assets is 24.7% in 2017 which was 15.4% a year ago. The company has deployed $103.8 million in growth initiative products which are financed through a combination of operating cash flow and debt facility.

Despite the positive announcement, SM1 stock plunged 1.923 per cent and currently traded at $10.710 with the market-cap of circa $1.96 Bn as of September 20, 2018.

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