23 Sep 2014

Synlait takes stake in China distributor

6:41 am on 23 September 2014

Synlait Milk plans to take a small but strategically important 25 percent stake in a China-based distributor of infant formula, managing director John Penno says.

Synlait's annual net profit has risen 70 percent to $19.6 million, mostly as a result of high global prices for its dairy products.

While the second half of the year underperformed the first half, the company was in a good position due to its plan to partner with the Sichuan New Hope Nutritional Foods, as well as a number of new and ongoing capital investments in the company's infrastructure, Mr Penno said.

"We have ongoing capital developments that are setting us up to serve both the large multi-national infant formula customers and large-in-market infant formula customers who we partner with as well.

"That is ongoing. We have three projects that were completed in the last financial year ... and we're working our way through two more projects."

It was the company's marketing strategy to have 70 percent of its business with first-tier multi-nationals - the big international players who were really well established, Mr Penno said.

"We want to have strong relationships with those companies, and we have good relationships with four of them now, and they are accounting for a growing proportion of our business."

However, it was also important to have relationships with smaller, up-and-coming companies, he said.