Shares in NZ-based dairy company Synlait Milk Ltd (ASX: SM1) rose 13% to $8.60 this morning after the company released its 2018 half-year results.
Synlait is currently enjoying the boom in the dairy industry – its shares are up over 250% in the last 12 months – thanks to demand from baby formula manufacturers like A2 Milk Company Ltd (Australia) (ASX: A2M).
Synlait’s results today appear to have impressed the market. Here are some of the key news headlines (all figures are in NZ Dollars):
- Revenue rose 52% to $439.3 million
- Net profit after tax rose 283% to $40.6 million
- Earnings per share of 22.7 cents
- The company is investing $260 million in expanding production capacity
“The growth trajectory of canned infant formula has continued with total consumer packaged volumes almost tripling from the same period last year and up 36% on the second half of last year,” Synlait CEO John Penno said.
Looking ahead, Synlait’s outlook includes lower profits in the second half of its financial year due to investment, but it is still expecting strong annual earnings growth overall.
Synlait also expects earnings to continue growing in 2019 as increasing volumes of infant formula sales contribute to revenue.
Prices of global lactoferrin (a key ingredient in baby formula) are also strengthening due to a mismatch between supply and demand, Synlait noted.
As a significant manufacturer of lactoferrin, and one who recently received approval to begin manufacturing in the USA, Synlait also expects that this will remain an important contributor to profits.
Synlait shares were trading up 11.7% at $8.50 on Wednesday, according to Google Finance.
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