Kiwi comes back for seconds

By PHILIPPA STEVENSON and NZPA

Kiwi Dairies has boosted its stake in West Australian ice-cream company Peters and Brownes to just over 68 per cent.

Kiwi already held a controlling 54 per cent in the Australian company. It did not explain why it needed to lift the shareholding by converting capital notes it already held.

Its initial stake of 51.6 per cent in Peters and Brownes cost more than $100 million - similar values applied to the 14 per cent stake added would value it at more than $30 million.

Kiwi chief executive Craig Norgate said the move demonstrated Kiwi's commitment to Peters and Brownes, and the New Zealand dairy industry's commitment to growing its business in Australia.

Peters and Brownes is an ice-cream manufacturer and dairy processor with an annual turnover of $550 million.

It owns the Australasian rights to the Cadbury brand of ice cream and four years ago bought New Zealand-based company Tip Top from Heinz.

New Zealand investments in the Australian dairy industry have been growing.

New Zealand Dairy Group bought just over 18 per cent of National Foods late last year, and the Dairy Board is in the process of forming a joint venture by taking a 25 per cent stake in Bonlac Foods.

Meanwhile, Kiwi has canned the planned $30 million expansion of its Stirling factory in South Otago, saying the proposed merger of dairy companies would alter processing requirements.

Instead, the company's dairy products manager, Max Parkin, said it would make improvements to increase the capacity of the existing plant and upgrade its waste-water treatment system.

"It will give extra capacity but will not be the full-blown project."

Peak-season milk not able to be handled at the plant would be taken to other plants for processing.

Details were still being finalised.

Last year, the company announced plans to increase the daily capacity of the plant from 1.5 million litres to 2.5 million litres, making it the biggest single cheese line in New Zealand and Australia.

Mr Parkin said most of the promised 24 extra factory jobs would not be jeopardised.

They were mostly extra drivers needed to collect milk from expanding dairy farms and the 44 new Otago and Southland farms that will supply the factory from next spring.

Final figures were still to be done.

With a proposed merger of Kiwi, New Zealand Dairy Group and the Dairy Board to form the Global Dairy Company, Mr Parkin said opportunities to work together rather than in competition would result.

Dairy Group is spending $150 million on a new milk powder plant at Edendale in Southland and a further $10 million at Clandeboye, near Timaru, following $106 million invested on the site last year.

More than 100 new farmers were expected to start supplying the two Dairy Group South Island plants from next spring.

"We are taking the opportunity of the intended creation of the Global Dairy Company to make wiser use of capital," Mr Parkin said.

Meanwhile, Dairy Group said its southern factory expansions would create 200 new jobs, half of them for tanker drivers, as well as plant operators, lab technicians, engineers, technologists and managers.

Mike Pohio, the company's South Island regional general manager, said a recruitment drive would seek 50 staff by the end of May, and a further 150 by the end of the year.

He said a shortage of skilled workers could make it difficult.