Oceania Dairy, Yili's NZ dairy processor, grows sales and losses supplying parent
By Jonathan Underhill
May 24 (BusinessDesk) - Oceania Dairy, the South Canterbury-based dairy company owned by Inner Mongolia Yili Industrial Group, has continued to make products for the Chinese market in New Zealand at a loss, its 2017 accounts show.
Revenue jumped 39 percent to about $228 million in calendar 2017 but much of that was swallowed up in costs, leaving gross profit 27 percent higher at $9.38 million. Administration costs drove up expenses, which climbed about 37 percent to $24 million. After tax, the loss widened to $13.5 million from a loss of $6.76 million in 2016.
Yili officially opened its Glenavy plant in November 2014. Production goes primarily into the factories and supply chain of Yili, according to its website, "The largest company in the dairy food market in China and one of the fastest growing dairy companies across the globe."
Total volume of product sold to other Yili companies Tianjin Yili and Kindairy was 34,233 tonnes, down from 37,631 tonnes in 2016. However, the revenue generated was steeply higher at $178.9 million from $133.9 million. Prices are benchmarked off whole milk powder on the Global Dairy Trade market. WMP was as low as US$1,890 a tonne in early 2016 before soaring at the year-end to as much as US$3,593 a tonne. For much of 2017, WMP has been above US$3,000 a tonne.
The company announced in October a $200 million investment in capacity in South Canterbury. The second stage of its development included a canning and blending operation for infant formula and two UHT manufacturing lines, general manager Roger Usmar said at the time. It expects to process more than 630 million litres of milk a year when the expansion is completed in 2019 and is aiming to lift export revenue to more than $700 million.
Yili mainly distributes dairy products and feedstuffs including milk powder for infants in China's domestic market. The purchase of Oceania by Yili in early 2013 was the Chinese company's first major offshore acquisition. Oceania's website shows the current product range is listed as whole milk powder, skim milk powder, infant formula, specialty powders and AMF.
In 2017, Oceania's wages and salaries bill rose to $15.3 million from $9.3 million a year earlier. Tax losses were $3.77 million, up from $1.89 million a year earlier. The company said it didn't recognise deferred income tax assets of $12.8 million in the latest year compared with $11.1 million in 2016. Accumulated tax losses grew to $45.6 million in 2017 from $39.6 million the previous year.