NEW ZEALAND – Dairyworks, a subsidiary of Synlait Milk, has sold its Deep South ice cream brand and operations to New Zealand-based food company, Talley’s Group, effective 12 November 2020, as it looks trim its portfolio and focus on its core cheese business.
The 42 years old Deep South brand was acquired by Dairyworks in 2016. Dairyworks was subsequently acquired by Synlait earlier this year, following an announcement in October.
“The sale of Deep South enables Dairyworks to focus on our core business, explore new market opportunities and deliver strong shareholder value,” said D
“Dairyworks is going through a period of rapid expansion in our core categories of cheese, speciality cheese, yogurt and convenience butters.
“Dairyworks is going through a period of rapid expansion in our core categories of cheese, speciality cheese, yogurt and convenience butters.”Tim Carter – CEO, Dairyworks
“While Deep South is a successful part of our current portfolio, ice cream is not our core business. The brand has strong growth potential for a business more focused on ice cream.”
Dairy companies in New Zealand have been selling down non-core assets in a bid to reduce debt, improve earnings and overall operations.
“The decision to divest the Deep South brand and its operations reflects Synlait’s intention to increase value in line with our strategy,” Synlait CEO, Leon Clement, said.
Earlier this year, Synlait announced that it was acquiring several hectares of farmland adjacent to its Dunsandel production site for NZD 25 million (US$16.6 million), as it aimed to expand its sustainability action.
Synlait, which is part owned by The A2 Milk Company, has not disclosed the value of this latest deal with Talley’s.
Synlait’s net profit for the year ended July was US$75.2 million compared with US$82.2m the year before. The result was at the lower end of its forecast range.
Revenue rose 27 percent, but its depreciation and financing costs offset that as the company expanded for future growth.
Its higher costs stemmed in part from buying cheese maker Talbot Forest, and smaller rival Dairyworks, which makes butter, cheese, and other dairy produce.
Synlait said it had built up higher inventories of some products to ensure there were sufficient stocks to cope with any disruption to supply chains caused by Covid-19.
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