Synlait Milk (NZX: SML) announces FY22 results, shares fall

Highlights

• Synlait Milk released its FY22 results today (27 September).
• The company also shares its “refreshed” strategy.

Synlait Milk Limited (NZX: SML), the New Zealand-based dairy manufacturer announced its FY22 results today (27 September 2022). It also announced its strategy, which focuses on the company’s core businesses like Advanced Nutrition, Foodservice, Consumers, and Ingredients.

As per the company, the key takeaways from the results were that it had returned to profitability with EBITDA up from NZ$91.8 million to NZ$129.1 million. 

Further, the review of its strategy has been completed, and commercial production for its multinational customers is likely to begin in 2023.

CEO of Synlait, Grant Watson, said that Synlait is well positioned as it entered its second year of recoveryThe company has progressed in its strategy and execution, but there is much to do, he said.

Key financials

The company reported a revenue jump of 21% to NZ$1.66 billion, and net profit after tax (NPAT) was up from NZ$67 million to NZ$38.5 millionEBITDA was up NZ$91.8 million to NZ$129.1 millionAdjusted EBITDA was up NZ$79.8 million to NZ$117.2 millionThe company’s debt was down 29% to NZ$341.9 millionThe company reported an operating cash flow of NZ$232.9 million and an impairment charge of NZ$12.2 million.

Further, the company reported a gain and lease back of the Auckland land and building of NZ$11.9 million.

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Forecasted average base milk price
Due to continued demand and supply mismatch, the forecast for the average base milk price is NZ$9.50 per kgMS for the 2022/2023 season.

Renewed strategy

Further, Synlait's “refreshed” strategy was a result of the bottom-up review of SML’s four business units.

Grant Watson, the CEO, further said the refreshed strategy was aimed at creating a greater focus and accountability across Synlait He said, with a clear strategy and the right leadership, the focus is now on better execution in FY23.

FY23 guidance

Synlait gave extensive guidance for all its businesses for the full-year FY22It said:

• Its Ingredients business will continue to be without its foreign exchange gains, and milk will be used to produce higher-margin products in Advanced Nutrition and Foodservice businesses.
• The Advanced Nutrition business, according to the company, will continue to build on its performance.
• The Consumer business will deliver a steady contribution as it continues to grow in overseas markets.
• Operational cash flows will be good but softer as compared to FY22.
• Costs to increase moderately due to supply chain and inflation pressuresAlso, the company has implemented SAP, which will take some time to stabilise.

Stock update

On Tuesday (27 September 2022), Synlait's stock was trading lower by 5.62% at NZ$3.360, at the time of writing.