New Zealand dairy business Synlait has withdrawn the earnings guidance for its 2024 financial year after battling with higher-than-expected costs.
The company’s previously announced guidance was for earnings before interest, taxes, depreciation and amortisation (EBITDA) at the lower end of a NZ$45m to NZ$60m (US$27.3m and US$36.5m) range, excluding a non-cash adjustment for a product costing method change of about NZ$17m.
However, Synlait said to the New Zealand Stock Exchange today (17 July) its financial performance has “been impacted by unforeseen year-end timing differences between July and August for manufacturing and shipping”.
It also pointed to “additional costs incurred in relation to the strategic review and deleveraging plan due to the extended timeframes to execute”.
As a result, Synlait expects its full-year EBITDA to be below the previous guidance “but continuing uncertainty means that it is not able to provide an updated outlook”, it added.
The board is “committed to resetting Synlait’s balance sheet to help it return to a position where it can deliver on the growth potential seen in its core Advanced Nutrition and foodservice businesses,” the dairy business said.
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It added that “considerable steps” were being taken to complete the deleveraging plan, such as paying NZ$130m into Synlait’s banks on Monday (15 July).
The NZ$130m was a loan from Chinese company Bright Dairy, which was approved by shareholders last week.
Synlait announced plans to secure the loan from Bright Dairy – which holds 39% of the Kiwi firm – last month amid further debt warnings and news it had abandoned the sale of its Dairyworks cheese business.
The company added today: “In addition to reducing debt, the business recovery plan for this financial year and next focuses on accelerating volume growth and optimising cost and operational performance. Synlait’s priority is to deliver on this broader plan.”
Synlait is still “on track” to meet its minimum adjusted EBITDA for its financial 2024 for bank covenant purposes, it added.
The dairy company’s share price was down 6.25% at the close of trading in New Zealand today.
