Continuing high international commodity prices have
resulted in Synlait Milk bumping up its forecast milk price
from $8kg/ms to between $8.30 and $8.40 for the 2014 season.
The Mid Canterbury-based milk processor has also lifted its
advance rates for the season effective from January, to be
paid February, from $5kg/ms to $6.40.
The company's 2014 financial year performance continued to
improve and, assuming market conditions prevailed, net profit
after tax would be in the range of $30 million to $35
million, significantly ahead of the prospectus forecast of
$19.8 million, chairman Graeme Milne said.
Craigs Investment Partners broker Peter McIntyre said it was
great news that the company had outperformed its prospectus
However, it was having to pay farmers more for product, which
would probably impact a little on earnings. Synlait shares
were also down a little yesterday, having opened at $3.950
and reaching a low of $3.800.
Mr McIntyre expected there would be a lot of happy Synlait
suppliers in Canterbury.
''I don't think there would be too many complaints around
[its] performance,'' he said.
Last month, dairy giant Fonterra unexpectedly left its
forecast milk price unchanged at $8.30 and slashed its
dividend by 22c, blaming the disparity between very high milk
powder prices, and those for cheese and casein.
At that time, Synlait Milk said the international dairy
commodity price differentials continued to favour its milk
powder and anhydrous milk fat dominant product mix.
Federated Farmers dairy chairman Willy Leferink said Synlait
was ''joining the fray'' to be in the same ballpark as
Before Christmas, Westland Milk Products lifted its in-season
forecast to $7.90-$8.30kg/ms, while Open Country operated a
continuous payout and both Miraka and Tatua would be highly
For farmers, that level of farm gate competition was positive
with other processors getting closer to joining the market
and it should keep Fonterra ''on their toes'', Mr Leferink
Yesterday, Synlait managing director John Penno said the
company was confident of delivery on its infant formula and
nutritional products strategy, despite challenges associated
with Chinese government regulatory reform.
In the short term, those regulatory changes would continue to
cause considerable disruption in the Chinese market and the
company might not achieve its forecast target of 10,000
metric tonnes of infant formula and nutritional sales this
However, it remained confident those changes would validate
the strategy of its business over time and would underpin its
ability to meet its long-term targets through expected volume
growth from key customers in that market, Dr Penno said.
A focus for the company this year was on the execution of its
growth initiative projects to support the development of its
infant formula and nutritionals business.
Those projects included a lactoferrin plant and a blending
and canning facility.
Commissioning of the lactoferrin plant was expected in late
February and commercial production should start in early
March, Dr Penno said.
While that was a little behind the planned commissioning
date, the company expected to exceed its forecast two metric
tonnes of lactoferrin sales in this financial year.