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NZ's Synlait Milk warns of profitability hit

01 April 2022

Performance could be impacted by Covid-related interruptions

New Zealand's Synlait Milk warned of a hit to its profitability growth for the rest of 2022, while posting a more than four-fold jump in earnings for its first-half mostly on weaker comparisons from the pandemic-impacted 2021, reported Reuters.

Synlait said its second-half performance could be hit by factors such as the Omicron variant of the coronavirus and the related-ongoing disruptions to global supply chains that may affect its ability to procure raw materials and export products.

The dairy firm also added that the domestic impact of broader labour shortages on its workforce remains unknown and could potentially hurt its production levels in the short-term.

Since last year, Synlait, which is part-owned by the bigger producer a2 Milk, has been hurt by the pressure dairy firms are facing due to pandemic-led disruptions to their supply chains.

"Navigating Omicron's impact on our people and supply chains, and ultimately deliver on the goal Synlait set at the start of this pandemic" remain key priorities, said Chief Executive Officer Grant Watson, who took the helm early this year.

For the half-year ended 31 January, Synlait reported a net profit after tax of NZ$27.9 million ($19.34 million), compared with NZ$6.4 million a year earlier.

However, the company added that its recovery plan would help it return to profitability levels by the end of 2023, just like in the years leading into 2021.

Source: Reuters


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