28 Jan 2014

Synlait raises forecasts

12:38 pm on 28 January 2014

Synlait Milk has raised both its payout to suppliers and its expected annual profit.

It cites high international milk prices, growth in its value-added products as well as good prices for the commodities it produces.

The company now expects to post an annual net profit between $30 - $35 million, compared with a prospectus forecast of $19.7 million and the $11.5 million it reported for the 12 months to July 2013.

Synlait has raised its forecast milk price from $8 per kg of milk solids to between $8.30 - $8.40 per kg. That compares with Fonterra's forecast payout to its farmers of $8.30 per kg.

Managing director John Penno said it's clearly going to be a very good year for dairy farmers.

But Chinese government regulatory reforms are disrupting the infant formula market and Synlait may not reach its target of 10,000 tonnes of infant formula and nutritional sales this financial year.

However, he said the company does not see that upsetting its longer term strategy.