Synlait: Next stop, cheese

Synlait is branching out into cheese production after almost doubling its net profit to $74.6 million.

The Canterbury-based, Chinese minority-owned dairy company remains in growth mode.

A South Canterbury cheese plant, Dunsandel liquid milk plant and a new greenfield processing site at Pokeno, north Waikato, will all come on-stream next year.

Synlait has a conditional agreement to acquire selected Talbot Forest Cheese assets for

$30m to $40m. This includes property, plant and equipment at a new 12,000 tonne Temuka site, the consumer cheese brand (Talbot Forest Cheese) and customer relationships.

Synlait chief executive Leon Clement said, releasing its latest annual result, that it had been a successful year for the company, with revenue increasing from

$759m to $879m.

An increase in infant formula sales helped to lift Synlait’s aftertax profit from $39.5m for the same period last year.

Synlait’s base milk price for the 2017-18 season was $6.65 a kilogram of milk solids, up from $6.16 the previous season and compares with Fonterra’s farmgate milk price of $6.69.

The forecast milk price for this season was $6.75 kgMS, matching Fonterra. Synlait had also allocated $1.3m in incentives for farmer-suppliers who met its new palm kernel-free farming category.

Declining commodity prices had led it to backtrack on its opening forecast of $7, mitigated to some extent by a weakening Kiwi dollar.

Construction of Synlait’s second $280m infant formula manufacturing plant at a greenfields site at Pokeno was behind schedule following the collapse of building firm Ebert Construction, said Clement. From a start-up 10 years ago, Synlait was now a $2 billion company, working with a portfolio of global infant nutrition customers.

Settlement of Talbot Forest Cheese was expected in August next year. Clement said the cheese category was as big as milk in the New Zealand domestic market.