September 25, 2013

Synlait's net profit after tax rise 6.5%

Synlait Milk's net profit after tax totalled US$11.5 million, 6.5% ahead of its prospective forecast of US$10.8 million, which is US$7.1 million higher than its 2012 result.

The newly listed Canterbury dairy processor and exporter's shares remained steady this morning at US$3.30. Revenue rose 11.5% to US$420 million in the year to July 31.

Synlait managing director John Penno said the company had made positive steps in all areas of its business. "The financial results we achieved in fiscal year (FY) 2013 are in line with the PFI forecast and represent an improvement in financial performance compared to FY 2012," he said.

He added that due to margin growth from increased sales across their value-added products and despite revenue being slightly behind target due to lower than expected infant-formula sales, profit targets were achieved.

The company remained confident of meeting its long-term objectives for its infant-formula and nutritionals business despite missing volume targets in the 2013 year because of market disruption caused by Chinese regulatory changes at the end of the financial year.

The company was well placed to take advantage of the new regulations, which were focusing on quality standards, pricing and consolidation of brands.

Its milk volume rose to 46.8 million kilogrammes of milk solids in 2013 compared with 44 million in the previous financial year. Manufactured volumes rose to 91,229 tonnes compared with 81,398 the previous year.

The company paid its milk suppliers an average of US$5.89/kilogramme of milk solids. No dividends will be paid for the 2013 or 2014 years, as stated in the investment statement and prospectus, while the company focuses on growth.

For the 2014 financial year, the company would focus on growth targets in its infant-formula and nutritionals business, and part of that would be the building of a lactoferrin plant, a blending and canning facility and extra warehousing, Penno said.