Global provider of nutritional milk products, Synlait Milk Limited (ASX: SM1) has announced that its opening forecast base milk price for the upcoming 2019 / 2020 season is $7.00 kgMS. Further, the company has increased its forecast base milk price for the 2018 / 2019 season from $6.25 kgMS to $6.40 kgMS due to recovering dairy commodity prices.
Following the release of this news, the share price of the company increased by 2.069% during the intraday trade as on 28 May 2019.
The forecast base milk price of $7.00 kgMS relies on pricing remaining robust throughout the season which is quiet realistic in the light of the current slowdown in world supply and strong demand from our key markets.
In the first half of FY19, the company reported Net profit of $37.3 million as compared to $41.3 million in the previous corresponding period (pcp). The company’s Powders and cream sales during the half year increased to 56,116 MT from 44,435 MT in HY18, representing a 26% increase. This was enabled by improved manufacturing efficiencies as a result of our IWS programme.
Net Profit After Tax (Source: Company Reports)
The company’s operating cashflow was reduced in HY19 to $31.5 million, down from $75.0 million in HY18, primarily due to: –
- Inventory balances of both finished goods and raw materials have built on higher than expected production volumes, and to meet forecast IFC sales in H2 FY19
- Increase in overhead expenditure to support the business
The company is anticipating strong operating cashflow generation in the second half of the year due to the sell down of carry over inventory and increased canned infant formula sales.
The company believes that it is on track to deliver FY19 canned infant formula volume guidance of 41,000 – 45,000 MT, with higher sales volumes forecast in H2 FY19.
The a2 Milk Company
The company has exclusive supply rights for The a2 Milk Company’sTM canned infant formula products for the Australia / New Zealand (ANZ) and China markets. Last year in July 2018, the company Announced 5-year minimum supply agreement with The a2 Milk Company. The company has exclusive supply partnership for infant nutrition in ANZ and China. The a2 Milk Company is a 17.4% shareholder in Synlait and is currently the largest New Zealand company on the NZX by market capitalization.
Now, let’s have a glance at the company’s share performance and the return it has posted over the last few months. The stock is trading at a price of $8.880, up by 2.069% during the day’s trade with a market capitalisation of ~$1.56 billion as on 28 May 2019. The counter opened the day at $8.800 and reached the day’s high of $9.020 and touched a day’s low of $8.690 with a daily volume of around 71,213. The stock has provided a year till date return of 1.87% & also posted returns of 9.43%, -13.52% & -12.74% over the past six months, three & one-month period respectively. It had a 52-week high price of $12.280 and touched 52 weeks low of $7.400, with an average volume of ~ 140,796
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