Synlait Milk abandons 2024 earnings guidance

Synlait said it remained on track to meet its minimum adjusted ebitda for 2024 bank covenant purposes, as the company announced on July 3. Photo / NZME

Cash-strapped dairy processor Synlait Mik has abandoned its earnings guidance for 2024.

The company’s previously announced guidance was for earnings before interest, taxes, depreciation, and amortisation (ebitda) at the lower end of a $45 million to $60m range, excluding a non-cash adjustment for the product costing method change of about $17m.

The company said today its immediate 2024 performance had been affected by unforeseen year-end timing differences between July and August for manufacturing and shipping, along with additional costs incurred in relation to the strategic review and deleveraging plan due to the extended timeframes to execute.

“Because of this, Synlait advises that its final ebitda result will be below the current 2024 guidance, but continuing uncertainty means that it is not able to provide an updated outlook,” it said.

Synlait said its board was committed to resetting Synlait’s balance sheet to help it return to a position where it can deliver on the growth potential seen in its core advanced nutrition and food service businesses.

To achieve this, considerable steps were being taken to complete the deleveraging plan, the company said.

The first step was completed on Monday with a $130m loan payment made to Synlait’s banks, made possible by the company’s 39% owner, Bright Dairy.

The board continued to progress with plans for a proposed equity capital raising and bank refinancing.

In addition to reducing debt, the business recovery plan for this financial year and next focuses on accelerating volume growth and optimising cost and operational performance.

Synlait said it remained on track to meet its minimum adjusted ebitda for 2024 bank covenant purposes, as the company announced on July 3.

At a special meeting last week, shareholders approved a last-minute loan from Bright to Synlait, enabling the company to make Monday’s repayment.

Infant formula marketer a2 Milk, which owns just under 20% of Synlait Milk, had earlier advised it would vote in favour of the loan from an affiliate of Bright Dairy.