Wednesday 08 June 2016 01:38 PM
Yili's Oceania Dairy narrows full-year loss as production ramps up, sales surge
By Jonathan Underhill
June 8 (BusinessDesk) - Oceania Dairy, the South Canterbury-based dairy company owned by China's Inner Mongolia Yili Industrial Group, narrowed its annual loss as sales quadrupled from its processing facility at Glenavy.
The loss was $16.3 million in calendar 2015, from a loss of $17.6 million in 2014, the first full year for the company created in 2013. Revenue soared to about $141 million from $34 million a year earlier, according to Oceania's financial statements.
Yili officially opened its $236 million plant in November 2014 and is investing a further $400 million over five years at the site to add an ultra high temperature (UHT) plant, formula canning line, blending facilities and expanded storage. It expects to process more than 630 million litres of milk a year when the expansion is completed in 2020 and is aiming to lift export revenue to more than $700 million.
It had acquired the fledgling Oceania in 2012, after the previous owners failed to raise enough funds to create their own dairy factory, gaining access to 38 hectares of land at Glenavy with existing resource consents for the plant. Most of the output is shipped to Shanghai Stock Exchange-listed Yili's factories and supply chain in China, where it is the nation's biggest dairy company.
Oceania's 2015 financial statements show cost of sales jumped to $135 million from $39.7 million, generating a gross profit of $5.9 million from a year-earlier gross loss of $5.6 million. However, distribution and administration expenses also climbed, and net finance costs more than doubled to $7.7 million, mainly for funding provided by other parts of the Yili group. The bulk of its sales were to other companies in the group, with prices based on auctions on the GlobalDairyTrade platform.
Its wage costs rose to $8.4 million from $5 million.