CSB - Riley Kennedy - Synlait Milk

Synlait Milk has reported a net loss of $182.1 million and stumped up with a one-off payment to try to keep its supplying South Island farmers.

The embattled dairy processor reported its full-year results to July 31 on Monday with revenue up 2% to $1.64 billion.

It took a total non-cash impairment of $114.6m during the year against its long-term assets.

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Episode Transcript

Speaker 1 (00:00):
Sport, the Latest from the Land and just great rock.

Speaker 2 (00:03):
It's the Country Sport Breakfast with Brian Kelly on Gold Sport,
your home of Live commentary. Joining me on the show
today to talk Sinlay is Riley Kennedy, who was the
New Zealand Shareholders Association Emerging Journalists for the Year in
twenty twenty two, out of Indidney's Business Desk, to analyze
the numbers that came out yesterday on Sunday Morning.

Speaker 1 (00:25):
Riley, Morning, Brian, how are you look very very well?

Speaker 2 (00:29):
Thank you? Though this is quite a story really and
reading through the numbers, it is a little bit of
a minefield, isn't it?

Speaker 1 (00:37):
Very much so? But the headline number is the fact
that they made one hundred and eighty two million dollar loss,
which is quite a lot of money.

Speaker 2 (00:44):
They've been facing challenging times of late, Sinlay, haven't they?

Speaker 1 (00:48):
Yeah, very much, sir, And it's they're certainly not out
of the woods yet. There's probably another twelve months to
go before they can say they're out of the woods.

Speaker 2 (00:56):
So even though they've posted the one eighty two million
dollar loss, revenue I believe is up.

Speaker 1 (01:02):
Yeah, revenue is up two percent off the top of
my head. They're actually not a bad year and revenue.
There's a bit of margin squares around their ingredients business,
which is the infant formula, but like the dairy weeks
business which they intended on selling, actually had a record
year and ebit diner, so it was while revenue was
actually up, they.

Speaker 2 (01:23):
Still made a loss and for the season just gone.
I think they've got a final milk price payout to
haven't they that's up around seven dollar marc.

Speaker 1 (01:31):
Seven dollars eighty three, which is in line with Fonterra
what they declared last week at their four years old.
But then also they paid out an average of twenty
eight cents an incentive switch is like their lead with
Pride program, and also the A two payment that their
farm is supplying the A two milk get so the.

Speaker 2 (01:50):
Dairy process as shareholders approved one in almost two hundred
and eighteen million dollar capital raised two weeks ago at
a special meeting to help restore it's balance sheet. Is
that going to make a difference.

Speaker 1 (02:03):
At their balanced date this year, they were carrying five
hundred and fifty million dollars worth of debt that the
capital rays two weeks ago, which takes a sick today
will see Bright Dairy increase its shareholding to about sixty
five percent. Day to milk company is also contributed and
may remain the second largest shareholder. That helps pay down

(02:25):
some debt. Their listed bonds will get repaid, But then
they're still carrying four hundred and fifty million odd dollars
in a banking syndicate which expires in October next year,
October twenty twenty five, which then they've got to refinance
that and hopefully they'll be able to get a bit
of headroom on that banking syndicate maybe two years or

(02:46):
three years down the track.

Speaker 2 (02:47):
And I believe too that milk from its North Island
farmer Supplies is now being sold to Telly zonned Open Country.
Is that right?

Speaker 1 (02:55):
That four hundred and fifty million dollar plant at Pocono
was effectively losing about a million dollars a week. They
had to find a way just sort of to hold
those losses. So the door violent suppliers they've been handed
off to Open Country, and that plant at Pocono, which
was only finished about three years ago, that's going to

(03:16):
just focus on advanced nutrition, which basically requires no raw
dairy products.

Speaker 2 (03:22):
So we're to from here for Sinley, then what's going
to happen next, do you think, Well, for.

Speaker 1 (03:27):
The next twelve months of Warner Mary and your report
that they're still going to carry this thing good look
called a material uncertainty as a going concern, So they
effectively needed to prove that they can continue for another
twelve months and that hinges on them getting a refinancing
deal to refinancing debt in October next year, which is

(03:51):
really up to the banks whether they come to the party.
But interestingly they said on Monday that the key We
Bank has joined syndicate and they were really keen apparently
to get exposure to someone.

Speaker 2 (04:05):
Well, that's great to hear kV Ben coming on board,
so let's watch the space. Riley, thank you.

Speaker 1 (04:09):
For joining us, mate, thank you very much.

Speaker 2 (04:11):
Out of our business desk here at into meet Riley
Kennedy here Gold Sport