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.
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.
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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.