A trading halt has been placed on Synlait Milk’s shares after the New Zealand dairy and infant-formula group cautioned it may need to provide fresh financial estimates.
Synlait Milk, which is listed in New Zealand and Australia, last month forecast an annual net profit after tax of NZ$15-25m ($9.2-15.4m), versus NZ$38.5m a year earlier.
In a filing with the New Zealand Stock Exchange, the market regulator NZ RegCo said: “Synlait has requested a trading halt of its ordinary shares and quoted bonds on the NZX Main Board and ASX to provide it with additional time to properly consider new information it has received which may require it to revise its previously issued guidance to the market.”
In the first six months of Synlait Milk’s financial year, a period that ran until 31 January, the company’s revenue fell 3% to NZ$769.8m.
The company’s EBITDA dropped 25% to NZ$51.5m and its net profit after tax slid 83% to NZ$4.8m amid what CEO Grant Watson called “subdued global economic activity and a slower-than-expected recovery of Chinese demand following Covid-19”. Sales volumes were hit by “delayed shipments” of the company’s ingredient products “significantly impacting first-half profitability”, he added.
The so far predicted guidance is due to factors including a cut in the forecast demand from customers for Synlait’s “advanced nutrition” products, “raw material supply challenges”, a shortage in CO2, general “high inflationary cost pressures” and “an extremely tight labour market”.