What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The 2014 year was good for farmers but volatility made it difficult to consistently achieve profit margins, and changes in infant formula market regulations in China “added complexity”, he said.
“However we are now in a strong position to take advantage of increased sales in this market.”
But the benefit of greater infant formula and nutritional sales expected to be balanced out by increased operating and funding costs.
Milne said Synlait intended to update its milk supply pricing in January 2015 with an update to its FY2015 forecast in March 2015 and news of interim results.
Managing director John Penno said infant formula and nutritional markets were now almost 50% of the business, with 45% of sales committed to four multinationals.
Capital projects this year include the completion of a third spray drier and a large quality testing laboratory at Dunsandel.
Synlait increased its revenue in 2014 by 43% to $600 million, up from $420m in 2013 and above the forecast of $524m.
