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Highlights
- Synlait Milk posts impressive NPAT and EBITDA growth for the first half of the year.
- Its FY22 profitability might be affected by supply chain disruptions and geopolitical tensions.
- However, the dairy company continues to improve its processes for sustainable profitability and growth.
Synlait Milk Limited (NZX:SML) Friday announced a power-packed H122 performance after a difficult 18 months period.
Source: © 2022 Kalkine Media® data source- EODHD/Others
Its NPAT was recorded at NZ$27.9 million, and EBITDA stood at NZ$68.4 million during the half-year period, up 338% and 45%, respectively, majorly on account of one-off gain amounting to NZ$11.9 million from the sale and leaseback of the land and building at its Auckland-based facility.
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Further, its revenue climbed by 19% to NZ$790.6 million during the said duration.
FY22 guidance
It anticipates its NPAT to return to robust profitability in FY22, owing to retained cost savings, improved infant base powder volumes, and more effective management of its Ingredient business.
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However, owing to the impact of Omicron and broader labour shortages, SML does not expect its profitability to replicate the same growth rate in the second half of the year.
Moreover, ongoing global supply chain disruptions and geopolitical tensions might affect the dairy company’s exports as well as its ability to procure raw materials. Further, the continuous rise in dairy commodity prices might impact its profitability in FY22.
Prudent Inventory Management for improved profitability
Amid all the above-mentioned concerns, Synlait is working on planned reductions in inventory to generate operating cashflows in excess of earnings, which would help in debt reduction and completing its capital expenditure programme.
Further, the Company is ramping up its new multinational customer at Synlait Pokeno, and continuous growth is being witnessed across its Consumer Foods business, thereby building into its FY23 performance.
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Bottom Line
Synlait Milk Limited is continuously focused on improving its systems, tools and processes, which is likely to result in a strong and sustainable growth.
At the time of writing on 1 April, SML was jumping by 3.32% at NZ$3.420.