Synlait Milk's net profit drops 9% as new investments drag

Synlait Milk chief executive Leon Clement. Photo / NZ Herald

Infant formula maker Synlait Milk said its annual net profit dropped by 9.0 per cent to $75.2 million, reflecting the impact of new acquisitions made over the last two years.

The Canterbury-based company last year bought Dairyworks for $112 million, in line with its move into "everyday dairy" products and complementing its acquisition of cheesemaker Talbot Forest.

Chairman chair Graeme Milne said the performance was resilient when viewed against the backdrop of Covid-19.

"The company remains solid and highly profitable with EBITDA growing strongly demonstrating the strength of our core infant and lactoferrin businesses.

"The net profit performance did reduce reflecting investments made in new facilities and acquisitions over the past two years to achieve our growth ambitions," chief executive Leon Clement said.

"We are however well positioned to grow earnings off our current asset base," he said.

Synlait was focused on building a sustainable, diverse and recurring earnings base that comes from multiple customers, sites, markets and categories.

"We are achieving this while balancing the needs of people, planet and profit in our decisions, and responding to changing customer demand against the backdrop of Covid-19," Clement said.

Clement said the result was strong "in an exceptional year".

Revenue in the year rose by 27 per cent to $1.3 billion.

Earnings before interest, taxes, depreciation, and amortization were up 13 per cent at $171.4 million.

Consumer-packaged infant formula sales up 15 per cent to 49,180 tonnes.

Lactoferrin sales were up 46 per cent at 30 tonnes.

Looking ahead, Synlait said it was in the process of finalising a long-term supply agreement with a new, multinational customer for packaged products which is expected to have a positive impact on earnings from 2023.