New Zealand's Synlait Milk expects annual loss on shipping delays

[BENGALURU] Synlait Milk on Monday forecast an annual loss, reflecting the pressure New Zealand's dairy firms are facing due to the Covid-19 pandemic-led disruption to their key supply channel to China.

Synlait now expects loss after tax for full-year ended July 31 to be between NZ$20 million and NZ$30 million (S$19.12 million - S$28.7 million), compared to a profit of NZ$75.2 million in 2020.

The dairy producer's woes follow its key customer and shareholder A2 Milk downgrading its full-year revenue forecast earlier this year after experiencing disruptions to the "daigou" channel.

Daigou trading, where people buy products for Chinese consumers and import them informally to the mainland, constitute a significant chunk of A2 earnings.

The channel has been constrained since last year due to a drop in Chinese students and with New Zealand closing its borders to most foreign arrivals.

Synlait's chief executive officer Leon Clement and chief financial officer Angela Dixon recently left their roles after market uncertainties led the company to withdraw its fiscal 2021 earnings outlook entirely in March.

The Canterbury-based firm expected shipping delays to continue which would defer the sale of some ingredient products like milk powder after the 2021 balance date, Synlait said in a statement.

REUTERS