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Synlait forecasts $6.50 payout next season

NZ Newswire logoNZ Newswire 29/05/2017

Dairy company Synlait Milk is forecasting a payout of $6.50 per kilogram of milk solids for next season and says it's expanding into Auckland.

The NZX-listed company on Tuesday said the 2017-18 forecast would be welcome news to its farmer suppliers following a difficult start to the previous season.

"We start the season with some confidence that supply and demand are more balanced, and this forecast reflects an expectation of dairy prices remaining at current levels," Synlait chief executive John Penno said.

The company will release an update on its 2016-17 forecast, set at at $6.25/kgMS earlier this year, in June and will declare a final price in September.

Last week, the country's biggest dairy company Fonterra also increased its forecast farmgate payout to $6.50.

In a separate announcement, Synlait said it had also bought 100 per cent of the shares of Auckland-based New Zealand Dairy Company - which is currently constructing a canning operation in Mangere.

"The facility will be infant formula capable, and will enable Synlait to substantially lift its blending and canning capacity," the company said.

"Having a second blending and packaging site will also begin to mitigate some risk we have faced as a single-site manufacturing company."

The company currently processes dairy out of its Canterbury facility, with most of its suppliers in the region.

The Auckland investment includes a payment of $33.2 million on acquisition along with $56.5m to expected be put into the plant once it's commissioned in October.

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