No float yet for Synlait Milk
By Pattrick Smellie
Dec 5 (BusinessDesk) - Synlait Milk's Chinese and New Zealand shareholders still want to list the company's shares on the NZX, but there will be no float in the near future, says the Dunsandel milk processor's chief executive, John Penno.
"At some stage, it (a share float) is on the agenda in that both shareholders believe long term it's the best place to have it sitting," he told BusinessDesk after Synlait Milk announced a maiden profit for the year to July 31 of $6.3 million.
Plans to float the company with a $150 million initial public offering were abandoned three years ago for lack of investor appetite after the global financial crisis and Chinese food producer Bright Dairy came on board as 51 percent shareholder, with Synlait Ltd holding the other 49 percent.
Bright Dairy said at the time it would be considering a share market float within three to five years.
However, Penno said for the moment the company was paying no dividends and reinvesting profits back into the business, and that expansion plans flagged in this year's annual report would be funded from a mixture of retained earnings, new capital from existing shareholders and debt.
"We are a young fast-growing company," said Penno. "We are quite comfortable leaving it for the time being."
Synlait Milk's first profit was earned on total revenues of $376.8 million, up 26 percent on the previous year. The company's accounts show it is employing property, plant and equipment valued at $214.1 million, up from $178.2 million in the previous financial year.
That reflects the company's investment in a purpose built infant formula plant, and upgrades to drying plant to allow production of "growing up" milk powders and high-value milk protein concentrate.
The company sees further opportunities for near term expansion, including installation of packaging plant for consumer goods. Synlait Milk is positioning itself as a supplier to rather than competitor of major dairy brands in export markets, particularly China.