Synlait, the exclusive infant formula manufacturer for The a2 Milk Company in Australia, NZ and China, has seen its half-year profits rise almost four-fold to $NZ40.7 million ($38.5m).
According to the company, which makes a range of nutritional products for a number of companies, its infant formula sales almost tripled in the six months to January 31 from the previous corresponding period.
Synlait’s managing director and CEO, John Penno, said the strong earnings growth of $30.1 million was been driven by increases in manufacture and sales of its highest margin products, as well as improved margins and earlier sales of ingredients products.
“The growth trajectory of canned infant formula has continued with total consumer packaged volumes almost tripling from the same period last year and up 36 per cent on the second half of last year,” he said.
“Our relationship with The a2 Milk Company continues to strengthen where we remain their exclusive manufacturer for the important Australia, New Zealand and China market.”
“We have also renegotiated our supply agreements with New Hope Nutritionals and with Bright Dairy, which provides for four-fold volume growth over a five-year period. However, we don’t expect this to impact sales until FY19.”
Over the six months to January 31, Synlait also invested $NZ34.5m in capital expenditure in New Zealand, including $11.2m in a blending and canning facility in Auckland, and $18.4m on a new wetmix kitchen in Dunsandel. The company also established a new research and development centre in Palmerston North.
The company also said it intends to spend $NZ125 million on an advanced liquid dairy packaging facility, and $260 million at Synlait Pokeno to establish a new nutritional powder manufacturing facility.
“We are also ready to begin to develop new categories and are focusing on developing opportunities in everyday dairy,” Penno said.
