Why did this ASX All Ords stock just crash 23%?

What is the news that has sent this company's share price into a dive?

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Falling ASX share price represented by young male investor sitting sadly in front of a laptop.

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Key points

  • This ASX All Ords share is plunging 23% 
  • The company downgraded its FY23 guidance 
  • The dairy company has also lowered its forecast for the milk price 

The All Ordinaries Index (ASX: XAO) is sliding 0.15% today, but this ASX All Ords stock is falling further.

The Synlait Milk Ltd (ASX: SM1) share price is tumbling 22.96% at the time of writing, currently trading at $1.51 a share.

Let's take a look at what this ASX All Ords stock reported to the market today.

What's going on?

This ASX All Ords stock appears to be sliding today amid a guidance downgrade and news of lower milk prices.

Synlait expects to deliver an FY23 result of between a net loss of $5 million and a net profit after tax (NPAT) of $5 million.

This is down from the company's previous prediction of profit between $15 to $25 million.

Looking ahead, Synlait is aiming to broaden its customer base, lower risk, lessen its cost base, and improve its balance sheet.

Explaining the guidance upgrade today, Synlait said:

Further Advanced Nutrition demand reductions, mostly from one of Synlait's customers, which impact consumer-packaged infant formula volumes and base powder production, are expected to have an NPAT impact of approximately $16.5 million in FY23.

The remainder of the NPAT impact (approximately $3.5 million) is attributable to less material factors, including higher financing and supply chain costs.

Meanwhile, Synlait has also downgraded its outlook for the base milk price in the 2022/2023 season to $8.30kgMS. This is down from a previous forecast of $$8.50/kgMS

The company noted the "slower than expected" Chinese recovery and "negative shift in sentiment towards the broader global economy" have resulted in "falling commodity prices".

Share price snapshot

The Synlait Milk share price has lost 51% in the last year.

This ASX All Ords stock has a market capitalisation of about $333 million based on the latest share price.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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