Just two months after Synlait Milk disappointed investors with a smaller-than-expected annual profit upgrade, it has now been revised down by $5 million.
That's even though its profit for the six months ended January rose by nearly 80 percent to $12.1 million while sales jumped 61.5 percent to $284.9 million.
Now, Synlait expects full-year profit will be between $25 million and $30 million. Before the January forecast, analysts had been expecting about $40 million.
However, the latest forecast is still higher than the $19.8 million prospectus forecast issued in June last year.
Synlait says the rise in first-half profit reflects strong earnings from its milk powder and cream products business.
However, the company says its earnings from infant formula and nutritional products were lower than expected because of regulatory changes in China and the product recall caused by Fonterra's botulism scare.
As well, it says the impact of the strong New Zealand dollar will also hurt the full-year outcome.
Managing director John Penno says his company decided to take a conservative approach in the face of these adverse events.
He says there is an ongoing move to products that give a high return and are sold to good-quality customers, and that's occurring alongside a very high commodity price environment in which it's often more difficult to get returns.
