So far, Synlait Milk hasn't taken an operational hit from covid-19, though not without "a heck of a lot of effort," says chief executive Leon Clement.
"We certainly saw risk coming and we got pretty close to the bone on a few things, but by and large we found our way through those," he told BusinessDesk.
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There were issues with inward container availability, ships that were cancelled, and some initial supply challenges from China as it shut down to manage the covid outbreak inside its borders.
"Then, as we worked on contingencies in Europe, the whole thing flipped on us and we suddenly had challenges getting product out of Europe and had to flip back to China contingencies."
Clement said from the outset the leadership mindset at Synlait had been on adaptability.
"We need to be agile; we need to be resilient and responsive," he said. "There has been a heck of a lot of effort to just keep the flow of goods running."
He's expecting disruption for some time to come and said the impacts of covid-19 were yet to be fully understood.
"All we know is they will be big so, whatever lies ahead, we just have to be focused on being ready to adapt," he said.
There have been no cases of covid-19 at Synlait.
But Clement said the company had not relaxed its already conservative protocols after New Zealand loosened the lockdown restrictions.
"Level 3 almost represents more risk to our business than level 4 because there is a lot more interaction out there in the communities," he said.
The level 3 lockdown did allow more flexibility for key projects across its supply chain and as it moved into maintenance at the tail-end of the milk season.
However, that involved bringing external parties onto sites "and we are already learning we just need to reinforce and continuously improve our protocols and education for people coming on the sites," he said.
He said the staff who had worked onsite through alert level 4 had become used to social distancing.
"You can see the people who have been living in their bubbles for the past four weeks are not used to coming back to work and physical distancing," he said.
Clement said the company's purchase of Canterbury's Dairyworks, which was completed on April 1, had been a positive and it had seen increased demand as people stayed home.
Dairyworks is based in Hornby, Christchurch, about 37 kilometres from Synlait's Dunsandel site. It specialises in the processing, packaging and marketing of dairy products including cheese, butter, ice cream and milk powder.
Synlait says it supplies nearly half of New Zealand's cheese and a quarter of its butter. It has a 9 percent market share in ice cream and a 19 percent market share in milk powder. Its brands include Dairyworks, Rolling Meadow and Alpine.
"I'm really pleased that we did it because it's actually diversified our business and we are always trying to create value and address risk at the same time," said Clement.
He was sanguine about Synlait's debt levels even in the current climate.
Net debt increased $159.7 million to $447.4 million in the six months to Jan. 31 as the company made significant investments in projects such as the manufacturing facility in Pokeno and the advanced dairy liquid packaging facility in Dunsandel.
"I'd perhaps be more concerned if we were significantly disrupted," he said.
He also said work was continuing to develop new customer relationships despite covid-19.
Flight to 'trust'
"Some of the more important strategic opportunities still remain in our frame," he said.
The company has a manufacturing and supply agreement with A2 Milk, which holds 17.4 percent of Synlait, its second-biggest shareholder behind China-based Bright Dairy, with 39 percent.
Clement says covid-19 has created an opportunity for New Zealand to "reset" the export model.
"We have a chance to look at how the world and consumer behaviour might change around this and, if anything, I think we will see a flight to trusted goods that potentially have a link to sustainability or environmental thinking," he said.
"A lot of those trends play to where the primary sector has been heading and where Synlait's sweet spots are," he said.
He noted New Zealand had a really coordinated approach to marketing tourism and New Zealand offshore, something the primary sector could replicate.
"You can't let a good crisis go to waste. You have to both manage risk and plan for the opportunities that emerge out of it," he said.