Synlait doubles profit in tenth year of operations with new tax after profit of US$74.6m

NEW ZEALAND – Synlait, a dairy processing company, has reported a net after tax profit (NPAT) of US$74.6 million, almost double the NPAT of US$39.5 million announced for the same period last year.

According to the company, the results for the financial year ending 31 July 2018 (FY18) were achieved in a period of large investment, and a renewed focus on the future.

An increase in finished infant formula sales helped to drive this profit, which was enabled by a number of investments in the blending and consumer packaging space.

“In November 2017 we completed our second Dunsandel wetmix kitchen, and the same month commissioned our Auckland blending and consumer packaging facility.

Both these projects have allowed us to increase our finished infant formula capacity,” said Graeme Milne, Chairman.

FY18 has been a successful year for Synlait, with top line revenue increasing from US$759 million to US$879 million and bottom line profit after tax growing from US$39.5 million to US$74.6 million.

“That is a gratifying 16% growth in top line and an 89% growth in bottom line,” said Mr Milne.

Synlait’s final average total milk price for FY18 has been announced at US$6.78 per kilogram of milk solids (kgMS).

This includes a base milk price of US$6.65 per kgMS (FY17 base milk price: US$6.16 per kgMS) and seasonal and average value-added incentive payments of US$0.13 per kgMS.

Synlait also announced that it has entered into a conditional agreement to acquire selected Talbot Forest Cheese assets.

This includes property, plant and equipment at a new 12,000 MT Temuka site, the consumer cheese brand (Talbot Forest Cheese) and customer relationships.

“The proposed acquisition builds on our existing portfolio of high-quality, flexible dairy manufacturing capabilities that can be tailored to meet customer needs,” said Synlait’s new CEO, Leon Clement.

“This has been a milestone year for Synlait as we grew both in capability and capacity. We’re stepping up in terms of our performance, and we’re looking ahead at where we want to be,” said Mr Milne.

Building a world-class leadership team in FY18 saw the appointment of several new directors to Synlait’s Senior Leadership Team.

This included Hamish Reid being appointed to the new Director of Sustainability and Brand role and Deborah Marris joining as Director of Legal, Risk and Governance. The Director, Quality, Regulatory and Laboratory vacancy was also filled by Dr. Suzan Horst.

In August John Penno stepped down from the role of Synlait’s CEO.

“John has been a wonderful leader for Synlait, taking the company from startup to a market capitalisation of over US$2 billion in ten years.

Fortunately, he will remain a part of the company in his capacity as a director on the Board,” said Mr Milne.

“Synlait’s new CEO, Leon Clement has stepped seamlessly into his shoes. Leon has more than 16 years’ experience in the industry and is the ideal candidate to take Synlait into FY19 and beyond,” he said.

The company added that during the past year Synlait’s relationships with its customers have strengthened, and the company is proud to work closely with a portfolio of global infant nutrition customers.

Synlait’s partnership with The a2 Milk Company (a2MC) has continued to grow and an extended supply agreement signed in July provides Synlait with a minimum five year term through to July 2023.

Synlait will continue as the exclusive manufacturer of the a2MC’s infant formula for the Australia/New Zealand and China markets.

“This agreement is really positive for both companies as it strengthens the relationship and provides certainty for all,” said Mr Clement.

Synlait has been working to secure product registration in China for New Hope’s Akara and Bright Dairy’s Pure Canterbury brands.

Both applications have been lodged with the State Administration for Market Regulation (SAMR – the replacement organisation for the China Food and Drug Administration) and it is expected these will be granted in due course.

As a further expansion into Everyday Dairy, Synlait has entered into a conditional agreement to acquire selected Talbot Forest Cheese assets.

“This acquisition enhances our current portfolio, and will cement Synlait as a company with high-quality, flexible dairy manufacturing capabilities that can be tailored to meet customer needs,” said Mr Clement.

“We will be able to manufacture a variety of cheese products that complement our existing product portfolio, whilst at the same time further diversifying our revenue streams.”

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