Synlait highest full-year profit

Specialist dairy company Synlait has had a year of records with bumper sales lifting it to its highest full year profit.

The company's net profit for the year ended July was $82.2 million compared with the previous year's $74.6m.

It had double digit increases across the board with revenue pushing up 17 percent to $1.02 billion on the back of higher sales volumes, although infant formula profit margins were lower.

Chief executive Leon Clement said the result reflected improved performance, new facilities, and a clear strategy.

"We delivered a strong financial result, supported our customers to grow and create value, while improving our operational efficiency ... our team delivered a strong result, invested in our future, and clarified our direction."

The South Canterbury-based company uses A2 milk to produce infant formula for The a2 Milk Company, and fresh milk products being sold in Foodstuffs' South Island supermarkets. It also produces the dairy ingredient lactoferrin and owns cheese maker Talbot Forest Cheese.

Clement said the company faced challenges, principally settling a dispute about the use of a site at Pokeno, south of Auckland, where it is building a second infant formula factory. A neighbouring landowner claims to have covenants over the site, which Synlait is taking to the Supreme Court for a ruling late next month.

It is waiting for some of its infant formula brands to be registered in China, and its new fresh milk packaging facility showed a loss of more than $3m because of commissioning problems.

Clement said the company was holding to its forecast milk price payout of $7 a kilo of milk solids. Its average final payout for the season just finished was $6.58, with a base milk price of $6.40 per kg and and average incentive payments of $0.18.

The company plans to spend $32m on a new warehouse at its Dunsandel site which Clement said would be more efficient and do away with double handling of a lot of stock.

This article was originally published on RNZ and re-published with permission.

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