Synlait defies milk slump

Synlait will publish its full earnings on the 19th of September.

Synlait Milk, the NZX-listed dairy company, says annual profit more than doubled on sales of higher-margin products.

Underlying profit was between $32 million and $33m in the year ended July 31, from $12.2m a year earlier, the Rakaia-based milk processor said yesterday.

Net profit, which includes the reversal of a year-earlier $1.7m loss related to inventory financing, was between $34m and $35m, up from $10.6m the previous year, it said.

Synlait is on track to produce its largest profit since listing in 2013, even as dairy prices on the GlobalDairyTrade auction remain depressed due to a global oversupply and weak demand for milk products.

The company raised $75m of new capital in its initial public offering and has used those funds to repay debt and build new plant to enable it to boost production of value-added products. Its gross profit per tonne jumped to between $880 and $890 in the latest year, from $593 a year earlier.

"Our IPO growth projects added the capability and capacity to execute our strategy of making more from milk," said chairman Graeme Milne.

Nutritional sales of canned infant formula underpinned the latest earnings, with an almost four-fold increase in canning volumes to 16,000 tonnes, from 4300 the year earlier.

Across all product categories, 2016 volumes increased to 116,402 tonnes from 97,803 tonnes a year earlier.

"Canned infant formula volumes have grown steadily since we commissioned our consumer packaging facility in FY15," said managing director John Penno.

The company will publish its full earnings on the 19th of September.

Shares in Synlait, which is 39 per cent owned by China's Bright Dairy, closed up 27c yesterday at $3.73.