Synlait Milk’s shares slump as debt widens - Market Close

Synlait Milk fell 5c or 6.67 per cent to 70c after posting a $96.2 million half-year net loss. Photo / 123rf

The New Zealand sharemarket had a down day following the Easter break, with Synlait Milk reaching a new all-time low after posting a near $100 million half-year net loss.

The S&P/NZX 50 Index fell at the opening after a mixed day on Wall Street and recovered gamely in the afternoon to close at 12,095.85, down 9.44 points or 0.08 per cent.

There were 85 gainers and 62 decliners over the whole market on volumes of 25.99 million share transactions worth $99.48 million.

Matt Goodson, managing director of Salt Funds Management, said there were some interesting moves on the local market in the closing match on Thursday - “everywhere you looked” - and many of these stocks retraced to where they were before the madness at the quarter’s end.

Increased bond yields rattled the United States markets after the Core Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation gauge, increased 0.3 per cent in February, down from 0.5 per cent in January but higher than late last year. Consumer spending jumped 0.8 per cent, ahead of the 0.5 per cent estimate.

The Dow Jones Industrial Average was down 0.6 per cent to 39,566.85 points, the S&P 500 declined 0.2 per cent to 5243.77; and the Nasdaq Composite was up 0.11 per cent to 16,396.83.

Still, the indices ended the March quarter well ahead. The S&P 500 rose 10.2 per cent, the best quarter since 2019; the Nasdaq increased 9.1 per cent; and the Dow Jones was up 5.6 per cent.

At home, Synlait Milk, which listed in July 2013, fell 5c or 6.67 per cent to 70c after reporting a 3 per cent increase in revenue to $793.5m and net loss of $96.2m for the six months ending January. Synlait had a total $90.2m writedown on assets and inventory.

Operating earnings (ebitda) were $19.9m compared with $36.1m in the previous corresponding period and Synlait’s full-year ebitda guidance was downgraded to $45m-$60m (in the previous year $90.7m). The forecast milk price increased from $7.50 to $7.80 per kg/MS.

Synlait’s net debt is $559m, up 8 per cent, and its banking syndicate has agreed to an extension for repaying $130m to July 15 and providing additional $30m short-term funding to June 27.

Goodson was surprised Synlait’s share price was down only 7 per cent. “There was a whopping great downgrade to its earnings guidance and we don’t know whether the guidance includes the sale of the Pōkeno and Dairyworks plants.

“Synlait has a complex financial restructuring and there has to be some hard-nosed negotiation between Bright Dairy [the majority shareholder] and the banks. The market pricing of the senior debt suggests the lenders may have to take some loss.”

Goodson said Synlait’s bonds were trading at a marked discount of nearly 40 per cent, 79c in the $1, and the $180m worth needs to be repaid by December 17.

Gentrack fell 40c or 4.49 per cent to $8.50; and Heartland Group was down 6c or 4.69 per cent to $1.22, both big risers on Thursday.

Port of Tauranga declined 9c to $5.31; Napier Port gave up 9c or 3.67 per cent to $2.36; a2 Milk was down 13c or 1.92 per cent to $6.65; Serko decreased 14c or 3.6 per cent to $3.75; Arvida Group shed 3c or 2.7 per cent to $1.08; and Restaurant Brands was down 8c or 2.29 per cent to $3.42.

The Warehouse was down 5c or 3.23 per cent to $1.50; Hallenstein Glasson declined 12c or 1.86 per cent to $6.33; Tourism Holdings fell 15c or 4.72 per cent to $3.03; Stride Property decreased 5c or 3.7 per cent to $1.30; and Vital Healthcare Property Trust was down 5c or 2.24 per cent to $2.18.

Fisher and Paykel Healthcare was up 52c or 2.03 per cent to $26.17; Freightways collected 10c to $8.95; Manawa Energy increased 8c or 1.76 per cent to $4.63; Michael Hill rose 3c or 4.11 per cent to 76c; KMD Brands rebounded 2c or 3.64 per cent to 57c; and NZME gained 2c or 2.27 per cent to 90c.

Comvita increased 4c or 1.9 per cent to $2.14; Third Age Health improved 3c or 1.79 per cent to $1.71; Accordant Group was up 2c or 3.57 per cent to 58c; PaySauce gained 2c or 10 per cent to 22c; and Colonial Motor Co rose 23c or 2.82 per cent to $8.38.

Radius Care, up 1.1c or 8.59 per cent to 13.9c, has refinanced short term borrowings with ASB, resulting in cost savings of about $1m a year.

Me Today, down 0.001c to 8.3c, has raised $3.1m, including $300,000 oversubscriptions, from its rights issue as part of a debt restructure plan.