Westland, Synlait to expand processing

Rod Quin
Rod Quin
Two South Island-based milk processors have announced further expansion plans involving investments totalling more than $200 million.

Westland Milk Products has a resource consent application lodged with the Westland District Council to build a $102 million nutritionals drier on its Hokitika site, which also includes new batching equipment, high specification mixing equipment, additional warehousing, another laboratory and a 25kg packing line.

The company was confident consent would be granted with conditions to meet any concerns about noise, traffic and air discharge, chief executive Rod Quin said.

The investment would create up to 36 new jobs in Hokitika and allow the company to produce an additional 23,000 tonnes of nutritional product each season.

The company's board has approved funding for the project from a combination of debt and retentions. It was expected to be commissioned in August next year and generate sales of $115 million a year when at full capacity.

Meanwhile, Mid-Canterbury-based Synlait Milk, which yesterday announced it had nearly doubled its net profit for the half year to January, is expanding the scope of some of its growth initiatives at its Dunsandel site and bringing forward some investment.

The company's second large-scale infant formula spray drier would now have 25% greater capacity than originally planned, while the board had also committed $6 million of additional expenditure to prepare the site for an eventual fourth large-scale spray drier.

Combined with the extra capacity, it would increase the estimated cost of the project from $103.5 million to $135 million, managing director Dr John Penno said.

Synlait Milk posted a $12.1 million net profit for the six-month period, up $5.3 million on the previous corresponding period.

Revenue increased from $176.4 million to $284.9 million, largely due to sustained high international commodity prices, chairman Graeme Milne said.

A $7.2 million increase in gross profit was due to strong earnings from its milk powder and cream products.

That was partially offset by lower than expected earnings from its infant formula and nutritional products business due to regulation changes in China and Fonterra's precautionary recall of whey protein concentrate, and an expectation the annual average foreign exchange rate would be higher than applied in the determination of the farm gate milk price.

That resulted in the forecast 2014 full-year net profit to be revised from a range of $30 million to $35 million, to a range of $25 million to $30 million, which was still ahead of the prospectus forecast of $19.8 million, Mr Milne said.

Fonterra has begun construction this week on its first blending and packing plant in Indonesia, aimed at supporting the growth of its consumer brands Anlene, Anmum and Anchor Boneeto.

The plant, in West Java, is Fonterra's first manufacturing facility in the country. It is expected to be operating by March next year, creating at least 150 full-time positions.

Demand for dairy in Indonesia was expected to grow by about 5% each year to 2020.


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