Synlait Milk: Cuts made to management roles

Synlait Milk will confirm in a few weeks if an expected half-year loss after tax in the range of $17 million to $21 million rings true.

The Canterbury-based milk processor foreshadowed, in a stock exchange guidance last month, a probable loss for the six months ended January.

This compares with $4.8m net profit during the same period last year.

Cuts have since been made to upper management roles.

Chief executive Grant Watson told NZX he was creating a smaller executive leadership team to increase alignment, reduce costs and accelerate growth.

Among the changes, he named Naiche Nogueira for a new chief commercial officer role, responsible for the advanced nutrition and ingredient businesses.

Nogueira was previously the director of advanced nutrition, a role disestablished under a restructure.

Also removed and folded into the business is the director role for quality, regulatory and laboratory services.

Watson is now down to two direct reports.

“Given Synlait’s current performance, we need a greater return on the capability and capacity of our executive roles,” he said.

“These changes will better align our structure for improved performance and provide greater focus and support for our people and our customers.”

Synlait is due to provide an update on its balance-sheet position when it confirms its half-year result on April 2. This date was deferred from March 25.

A $17m to $21m range was based on an initial consolidated result, subject to further review and possible adjustments — including accruals, provisions, and impairments that are still being assessed.

Synlait credited the loss to increased financing, operational costs and margin reductions for ingredients and advanced nutrition.

In September, the company was expecting its earnings before interest, taxes, depreciation, and amortisation to improve compared with last season.

Synlait now believes its financial result is likely to be “broadly flat” or down on last season.

The company said its board and management were working on the need to deleverage its balance sheet as a priority.

The major financial stakeholder in Synlait is Bright Dairy, of Shanghai, with a 39 per cent shareholding, while a2 Milk has a 19.9 per cent shareholding.