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March 19, 2020

Synlait experiencing Covid-19 supply-chain issues; China office remains closed

Synlait, the New Zealand-based dairy and infant-formula manufacturer, has provided an update on coronavirus as it reported first-half results.

By Dean Best

Synlait Milk, the New Zealand-based dairy and infant-formula manufacturer, said it is experiencing “pressure on the broader supply chain” as a result of the Covid-19 outbreak.

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The Canterbury-based business said its office in China remains closed due to coronavirus as it reported first-half results today (19 March), which showed net profit after tax fell 30%, “reflecting higher depreciation and interest costs as we invest for growth”.

Only last month, Synlait chief executive Leon Clement had said the company was “not currently experiencing any supply chain disruption” as a result of coronavirus as the business cut its full-year profit guidance on the back of the outbreak.

Today, Synlait said it was seeing particular pressure on the supply chain from “container space availability and shipping schedules”, but added there was “no significant operational impact to date”.

Synlait said it was “managing this risk through strong relationships with raw-material suppliers and logistics partners, and leveraging them to gain forward views of export capacity”.

Meanwhile, the company has suspended international travel for its employees, who can only travel domestically for “essential business” reasons, while staff are working from home where possible. 

Synlait made no change today to its revised guidance for net profit after tax (NPAT) announced in February of NZD70m-85m. That metric fell 30% in the first half ended in January to NZD26.2m (US$14.8m), while revenues increased 19% to NZD559m. EBITDA dropped 4% to NZD67.6m.

Last week, Synlait revealed its previously announced deal for fellow New Zealand dairy company Dairyworks had been cleared by the Overseas Investment Office and said then it expected the business to contribute a couple of a million dollars to profits this year.

Related Companies

Free Whitepaper
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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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