Ashburton farmer and Synlait supplier Stacey Stewart believes that Synlait’s announcement of a return to profitability this week will give farmers another boost of confidence in the once-ailing company.
“Everyone is feeling pretty positive about Synlait, and it’s great they have managed to turn things around so swiftly and have done what they said they were going to do.”
The company has reported that most of its South Island suppliers are no longer under a “cease notice”, and the threat of losing farmers to competitors has waned.
Stewart believes that many farmers had already regained confidence in Synlait following a January announcement, which indicated a return to positive results for the first half of the year.
However, this week’s update is likely to reassure any remaining suppliers still uncertain about the company’s stability.
Synlait acting chief executive Tim Carter said in a statement that he anticipates farmer confidence in the company will “further increase” and is calling the half-year result for the six months ended January 2025 a “considerable commercial achievement.”
The result, released on March 24, shows the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) was $63.1 million, just above the guidance range of $53 million to $63 million announced in January.
Synlait is also reporting a net profit after tax (NPAT) of $4.8 million, marking a 105% increase.
The company attributed this turnaround to higher commodity prices, increased demand for advanced nutrition, and stricter cost controls.
Carter credited the result to “a focus on getting the fundamentals of our operational performance right, seizing opportunities to deliver for customers, and continued cost control.”
Synlait director of on-farm excellence, business sustainability and corporate affairs Charles Fergusson said that while it’s a only six-month result and “the job was far from done”, he is pleased with what the company had achieved.
“It’s great progress and faster than we expected.”
Fergusson said the company has been focusing on what’s important – producing high-value nutritional products on a consistent basis.
“That’s what we have been focused on for the last 18 months, but we have really seen that come to fruition in the last six months, and that shows up in this result.”
Fergusson acknowledged that Synlait had created a lot of uncertainty in their farmer base for most of last year; and they had been working diligently since September to rebuild that trust.
“We have repaired our balance sheet, printed a positive result, and put a package out called Secured Milk, an incentive to acknowledge that your dairy processor is an incredibly important part of your business.”
Fergusson said that farmers are supportive of Synlait, describing the company as “the best milk supply team in the country.”
“We have a healthy ratio of people to farmers; that sets us apart.”
Fergusson added that Synlait has received strong support from farmers, praising the company’s milk supply team as “the best in the country.”
He highlighted the healthy ratio of people to farmers, which he believes sets the company apart from competitors.
Looking ahead, Fergusson said that Synlait is on track to achieve a more balanced risk equation.
“There will be some losses, but what’s encouraging is that we’re also seeing some gains,” he said.
Synlait announced the appointment of a new chief executive, Richard Wyeth, in March.
Wyeth’s tenure will begin on May 19.
You can now read the most important #news on #eDairyNews #Whatsapp channels!!!
🇺🇸 eDairy News INGLÊS: https://whatsapp.com/channel/0029VaKsjzGDTkJyIN6hcP1K
