Dairy farmer profits to hit record levels in 2025
The profitability of dairy farmers is likely to increase in the coming year, accordign to the latest report by the Ministry for Primary Industries (MPI) on the outlook for the primary sector.
Revenue for the year reached $420M, an increase of 11.5% over the previous year. This was driven largely by increased sales volumes.
Synlait Milk managing director John Penno says the company made positive steps forward in all areas of its business relative to the previous year.
"The financial results we achieved in FY2013 are in line with the PFI forecast and represent an improvement in financial performance compared to FY2012. Profit targets were achieved due to margin growth from increased sales across our value added products and despite revenue being slightly behind target due to lower than expected infant formula sales.
"We remain confident of meeting our long term objectives for our infant formula and nutritionals business despite missing volume targets in FY2013 primarily due to market disruption caused by Chinese regulatory changes at the end of the financial year. We are well positioned to take advantage of new regulations taking place in China that focus on quality standards, product pricing as well as a consolidation of brands.
"We are focused on our value added milk powder and nutritional powder business, and building a reputation for quality and technical excellence," says Penno.
The company's milk volume grew to 46.8 million kgMS compared to 44m kgMS the previous year. Milk suppliers were paid an average milk price of $5.89/kgMS.
Penno says the focus for Synlait Milk in FY2014 will be on continuing to achieve operational targets and on the execution of its growth initiative projects to support the development of its infant formula and nutritionals business. They include a lactoferrin plant, a blending and canning facility and extra warehousing.
"Each of these growth projects is specifically designed to either enhance our value proposition and build volume with targeted infant formula and nutritional customers, or enable us to continue providing volume to our ingredient business customers as the infant formula and nutritional business grows.
"Our customer and market development strategy is progressing to plan and over the last year we have signed supply agreements with a number of new infant formula and nutritional companies in China. We expect these relationships to develop along similar lines to the growth pattern we have enjoyed with Bright Dairy," says Penno.
