Content supplied by Synlait Milk
Continuing high international commodity prices have resulted in Synlait Milk increasing its forecast milk price for the FY2014 season from $8.00 per kgMS to a range of $8.30 to $8.40 per kgMS.
The Company also lifted its advance rates for the season effective from January, to be paid February, from $5.00 per kgMS to $6.40 per kgMS.
Synlait Milk Chairman Graeme Milne says it is the Company’s policy to pay its contract milk suppliers a competitive market price and the increase reflects the sustained high commodity prices.
“Our forecast FY2014 financial performance continues to improve and we expect the Company will benefit from both earnings growth in our value added categories and a favourable product mix for the remainder of this financial year. Assuming current market conditions prevail our FY2014 net profit after tax will be significantly ahead of the prospectus forecast of $19.8 million, and is forecast to be in the range of $30.0 to $35.0 million,” said Mr Milne.
Synlait Milk Managing Director John Penno says despite challenges associated with Chinese government regulatory reform the Company is confident of delivering on its infant formula and nutritional products strategy.
“In the short term these regulatory changes will continue to result in considerable disruption in the Chinese market and we may not achieve our forecast target of 10,000 metric tonnes of infant formula and nutritional sales this financial year. However, we remain confident that these changes will validate the strategy of our business over time and will underpin our ability to meet our long term targets through expected volume growth from our key customers in this market.”
“Meanwhile business development continues in key markets outside of China. We expect to commence production of milk powders as infant formula ingredients for two new tier one multi-national companies in the second half of this financial year,” said Mr Penno.
Synlait Milk also expects to commission its lactoferrin plant late February with commercial production commencing from early March. While this is a little behind the planned commissioning date the Company expects to exceed its forecast two metric tonnes of lactoferrin sales in this financial year.
A further update on Synlait’s year end financial forecast is expected when it announces its interim results on 27 March 2014.
6 Comments
The high prices are causing the USA to divert production into dryers ,as is the EU.
China imported a record large 77.4 million lbs. of skim milk powder (SMP) in December. Combined SMP and whole milk powder imports were also record large and were more than two times greater than December 2012 volumes. For the year, China’s WMP/SMP imports were 50% higher than in 2012.
It will be interesting to see how long it takes for Europe and the USA to increase production. In California heifers are in short supply and older cows are being kept on.
Had a very interesting chat to a large scale Texan dairy farmer who stayed with us, Aj. Water is proving to be a HUGE issue over there. Water is also proving to be an issue in the grain belt of Canada. Farmers we have spoken to in both places are talking about probable restrictions being made on the number of crops they can grow per year in an effort to reduce irrigation water takes. Texan farmer also said that there are many empty feed silos on farms that have to buy in feed as they can't afford the prices. Our USA friend receives approx 2/3s of what NZ Fonterra farmers do for milk. I made a comments here a while ago that a NZ company is busy offshore building driers.
What did surprise me is the almost obsessive interest USA farmers have with everything that happens here in NZ dairy. The media updates they get - at times daily - is quite amazing.
CO, water is a big deal here,now. They are up with us in some areas and way behindin others. Ive been discussing a few ideas with locals that with us would be considered logical, not here. Maybe they have been subsidized too long. Then again things have been different here a long time.
http://www.sacbee.com/2014/01/27/6105769/as-california-drought-continue…
http://www.amazon.com/Octopus-California-Twentieth-Century-Classics/dp/…
Just adding the respective milk price to the company profit, or in the case of Fonterra their dividend, to give an idea of the total value each is extracting from each kg of milksolids.
I would expect the companies who are concentrating on WMP to have a real advantage and that $9 figure should be in sight for them.
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