a2 Milk gets approval from American food authorities to break into the US infant formula market

The  a2 Milk  Company has  made a  breakthrough  into  the lucrative  US  market, winning approval  from the  US  Food  and  Drug  Administration to  market  its infant formula product  in  the  US.

The company will be  able  to take  advantage  of  the  shortage  of  supply   there  because  one  of  the  main  local  manufacturers  went  out of  production.  Another  beneficiary   will be  Synlait  Milk  which  manufactures  infant formula   for  a2Milk.

Previously   a2 Milk has  been  limited  to  marketing  its  liquid  product  in  the  US.

Now, once  it  gets  a  foothold  in the  US  for  its  infant  formula,  it could  get  a  sharp  boost  to  its  revenue. In   its  most  recent  year, it  achieved  a net  profit  of  $114m,  59%  ahead of the  previous  year.

The a2 Milk Company’s CEO, David Bortolussi, said: Continue reading “a2 Milk gets approval from American food authorities to break into the US infant formula market”

Synlait is confident it is back on the path to pre-2021 profitability levels

ANZ  reports widespread autumn rain has devastated many arable and fruit crops, but has been welcomed by pastoral farmers.

Food commodities are in short supply globally.  New Zealand will  export less produce than normal this season as production of most  export commodities is impacted for varying reasons including delays with the processing of livestock and the impacts of labour shortages.

So it  was  something of  a  surprise,  but  a  welcome  one,  when Synlait Milk reported  its net profit (excluding the sale of an Auckland property) had risen 128% to $14.5m in the first half.

The  dairy  processing company said it was also on the way to reporting previous levels of profitability in the 2023 financial year after posting a $28.5m loss in 2021.

And  as  ANZ reported, the  wet weather in  some regions  will  not  have worried  dairy farmers. Continue reading “Synlait is confident it is back on the path to pre-2021 profitability levels”

Dairy industry profits are a bright spot in an economy headed for recession

NZ’s  dairy  industry, under constant  fire from critics for its methane emissions,  pollution of  waterways  and  intensive farming practices in recent years, almost  overnight  is shaping up   to be one of the  country’s  saviours  as the economy dives into  recession.

While  other   key export sectors — tourism, forestry, education — are jack-knifed by the  coronavirus  pandemic,  the dairy industry’s earnings  more than ever before are proving it to be  what the  critics  have scorned:  “ the backbone of the economy”.

The  much  maligned Fonterra Co-op  this week  reported total group sales revenue in  the  six months to  January 31 increased by 7% or $678m to $10.4bn, mainly due to improved pricing and the product mix  sold.  That  compared with  $9,745bn  in the  January  2019  half.

And  Fonterra  is  keeping its  farmgate  milkprice  forecast   in the $7-$7.60 /kg  range.  That  means  more than $11bn  being paid to  its suppliers. Continue reading “Dairy industry profits are a bright spot in an economy headed for recession”

Payout perplexity – more money for farmers would impede Fonterra’s financial recovery

Synlait  Milk’s  updated forecast  milk price— now  $7.25kg/MS,  up  from $7kg/MS —renews pressure  on   Fonterra  to  hit the  upper limit of  its own  forecast.

For the industry  as a  whole,  the  higher milk payouts  underline  the strong  global demand for  NZ  dairy products.  And  they  provide  some welcome sunshine   into   many of the  county’s  dairy sheds.

When  Fonterra  in  December   flagged   it  was  aiming  for  the midpoint of  its  $7  to $7.60 forecast range, it  said that  a  $7.30 milk price  would be  the  fourth  highest   in its  nearly  two  decades  of  operation.

That  $7.30kg/MS  is  comfortably ahead  of  Dairy  NZ’s  estimate  of break-even  for Fonterra’s suppliers  of  $5.95.

But  now  Synlait is  saying  is it has  raised  its  forecast  payout on the back of  higher than expected commodity prices at the end of 2019.  It believes those will hold in the medium term as supply and demand continue to be evenly matched.  Continue reading “Payout perplexity – more money for farmers would impede Fonterra’s financial recovery”

A tale of two milk companies – one of them is being suckled by taxpayers

The contrasting fortunes of Synlait Milk and Westland Milk Products were thrown into sharp relief last week. On the one hand Synlait won applause at its annual meeting from shareholders, impressed by its performance in virtually doubling profit ($74.6m against $39.4m) in its tenth year of operations. On the other hand Westland had the begging bowl out for a Provincial Growth Fund loan of $9.9m which will help the co-op in funding a $22m manufacturing plant aimed at converting milk to higher-value products.

The Westland dairy exporter, discussing a capital restructure in its 2018 annual report, said it had relatively high debt and limited financial flexibility.

Commenting on the PGF loan, chief financial officer Dorian Devers is reported as saying the co-op could have financed the project in other ways “but the terms we have been given from the PGF are more favourable. It’s a longer-term loan than we can get from a bank which is nice”.

The NZ Herald quoted economic consultant and former ANZ Bank chief economist Cameron Bagrie as saying the loan sets a “dangerous precedent”. He reckons it appears to be corporate welfare. Continue reading “A tale of two milk companies – one of them is being suckled by taxpayers”