Tuesday, 26 September 2017 12:55

Synlait eyes more branded products

Written by  Nigel Malthus
Synlait chief executive John Penno. Synlait chief executive John Penno.

Canterbury milk processor Synlait is looking to expand into own-branded consumer products after posting a record net profit.

Its net profit of $38.2 million for the year ending July 2017 shows a healthy gain on the $34.4m it posted for the financial year 2016.

Revenue was up 39% from $546.9m to $759m and net debt was down from $214m to $83m.

Over the next 12 months will come a move into new categories, chief executive John Penno told a media conference announcing the result. These will include own-branded consumer products.

Until now Synlait has produced industrial packaged or consumer packaged products under partner brands such as A2 Milk and the Chinese New Hope Nutritionals. Penno said Synlait’s own-branded products are unlikely to include infant formula because the company values its existing partnerships.

Penno said Synlait had bought out the New Zealand Dairy Company, which is already building a new blending and consumer packaging line in Mangere, Auckland. The $52m plant is expected to be commissioned in October and will enable Synlait to meet growth in demand for infant formula products.

The plant will have over-capping technology that will improve product appearance and enable the scoop to be presented under a raised plastic enclosure rather than in the product itself.

“We are also investing to retrofit this technology into our Dunsandel facility in the coming year,” he said.

Three new sachet packaging lines will also be installed at Dunsandel.

Already under construction at the plant is a second “wet-mix kitchen”. The wet-mix process adds supplementary ingredients such as vitamins to wet milk and mixes them before it goes to the driers, so giving better consistency in the finished product.

The new $37m, 45,000 tonne/year machine will allow both the factory’s infant formula spray dryers to operate simultaneously, effectively doubling the plant’s capacity.

“We own and control every step in our value chain, from differentiating the milk supply behind the farmgate to managing market access for our customers.

“We guarantee an unrelenting focus on quality, integrity and value in this system, offering a powerful point of difference for our customers and their consumers,” said Penno.

“Our attention is on accelerating our infant formula business and preparing to launch into new high returning dairy categories. We are also working to reinvigorate our ingredients business and add value by systematically moving our milk products into consumer packaged formats.”

Synlait confirmed a total average milk price for the 2016-17 season of $6.30/kgMS, consisting of a $6.1/kgMS average base price and a seasonal and average value-added premium payment of 14c/kgMS.

Synlait’s forecast milk price of $6.50/kgMS for the 2017-18 dairy season remains unchanged.

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