Revenue exceeded NZ$1bn (US$644m) for the first time, increasing 17%; net profit increased 10% to NZ$82.2m (US$53m); operating cashflow increased 39% to NZ$136.7m (US$88.1m); sales volumes increased by 16% to 149,730 MT; consumer packaged infant formula volumes went up 21% to 42,907 MT; and the average milk price was NZ$6.58 (US$4.24) per kgMS for the 2018/2019 season, made up of a base milk price of NZ$6.40 (US$4.13) and NZ$0.18 (US$0.12) in incentive payments.
Synlait said its financial result was characterized by growth in infant nutrition volumes, efficiency gains (signaled at half year), and an expansion in lactoferrin capacity and resulting sales. These three factors help contribute to an increase in total gross profit of 12%.
The company said financial performance was supported by a sustainability agenda, progressing on commitments made last year.
New Zealand’s first large-scale electrode boiler was switched on at Synlait Dunsandel in March 2019. This was a sustainability milestone for Synlait as it aims to reduce its carbon foot-print by 2028.
Investments
Synlait said the balance sheet that emerged at the end of FY18 provided a range of opportunities for investment, which were progressed during FY19. Growth projects delivered in FY19 include:
• The NZ$260m (US$168m) build of Synlait’s new infant-capable manufacturing facility in Pokeno, which is close to commissioning;
• The NZ$18.9m (US$12.2m) expansion to lactoferrin facility was completed on time and budget, doubling manufacturing capacity;
• The NZ$134m (US$86.4m) advanced liquid dairy packaging facility at Dunsandel was designed, built and commissioned within 18 months, and began supplying liquid milk to Foodstuffs South Island in April; and
• The Talbot Forest Cheese acquisition was completed on August 1, 2019.
The company also created 218 jobs in the financial year.
New investment
The company also announced a new NZ$32m (US$20.6m) investment, Dry Store 4, an additional 30,000sqm warehouse at Synlait Dunsandel, which will streamline logistic activities while bringing offsite South Island storage back to the site, supporting future growth and generating supply chain efficiencies.
Synlait said this will also enable greater control over inventories, traceability and value add services, improve the sustainability footprint and result in shorter lead times for customers.
The project is expected to deliver a strong investment return based on the planned efficiency gains. The warehouse will create 20 new jobs and is expected to be completed in September 2020. Total usable warehouse space at Dunsandel will increase to 55,000sqm on completion.
2020 expectations
The company said it expects FY20 profits to continue to grow, with the rate of profitability increasing at least at a similar rate to that of FY19 over FY18. Expected earnings growth will be driven by: continuation of momentum from the second half of FY19; a full year of operation of the advanced liquid dairy packaging facility and the first sales of long-life products in the second half of FY20; continued progression of the Everyday Dairy strategy; a full year of operation of the expanded lactoferrin facility; and, a contribution from Synlait Pokeno, which will be commissioned shortly.
