Media Updates, page-12395

Yeah it is quite vague but comes down to how one interprets this statement:

"Advanced Nutrition forecast demand and production has been reduced or delayed following forecast changes by Synlait’s largest customer during HY23 and more recently by other customers."

There's no doubting that the largest customer is A2M. However, they also refer to changes 'more recently' by other customers which makes it read as though the changes from A2M were some time ago. If that's the case then they did not seem to precipitate an update from either A2M or SM1 at the time.

Given all this my read is that the changes from A2M are probably based on what was known around the time of A2's 1H23 report. A2M most likely have communicated their anticipated inventory requirements from SM1 consistent with the outlook they reported in Feb, and this was lower than SM1 had anticipated at that point.

Doubt it will be viewed favorably by the market either way, but to me we are seeing the flow on effect of A2M's relatively weaker outlook for 2H23 hitting Synlait with a slight lag (coupled with a bunch of other SM1-specific issues). Part of the reason is also that A2M have ramped up production of China label ahead of the SAMR deadline, so now needs to clear that inventory in 2H23 before ordering new product from SM1.