Synlait posts first half $10.6m profit
Synlait Milk has made an after-tax profit of $10.6 million for the first half of the financial year, and expects to record a ‘‘modest’’ lift in profit for the full year.
The result compares with a profit of $12.3m for the same period last year, with the company saying investment in people and business development accounted for the decline in earnings.
Synlait’s net debt fell from $292m to $147m, driven by operational cash flows and the $97.6m of new equity raised from its rights issue last October.
Chairman Graeme Milne said the Canterbury-based company had built its team and balance sheet strength. Four new members had been appointed to its senior leadership team the past six months.
He said the core strategy to partner with leaders in the infant formula and adult nutrition industries was bearing fruit.
‘‘These half year results demonstrate the early success of this strategy and we’re pleased with our pace of execution.’’
Chief executive John Penno said the forecast farmgate payout remained at $6.25 per kilogram of milksolids, although the company had signalled to its 200 suppliers the price might fall due to recent volatility. Fonterra’s payout is $6 kg/ms plus a dividend range of 45-55c.
Synlait would not be taking on any more suppliers in the short term as its plants were at capacity.
Penno said Synlait remained confident with its infant formula business and China’s evolving regulations. ’’We are watching what is happening, we are interested in what the Chinese are trying to achieve, which is to have safe products. They also want to have fewer brands.’’
Synlait has started work on a second wet mix facility to double the infant formula base powder capacity of its Dunsandel site to 80,000 tonnes by November. Its gross margin is $43.7m, $2m higher than for the first six months last year, mainly due to higher volumes of canned infant formula.