Pengxin's Milk NZ unit triples sales, profit after buying farms
Dec. 29 (BusinessDesk) - Shanghai Pengxin's Milk New Zealand Holding unit tripled its sales and profit last year after
acquiring a controlling interest in Canterbury-based Synlait Farms and agreeing to extend its land holdings with farm
acquisitions in Northland and near Taupo.
Profit rose to $32.8 million in the 12 months ended June 30, from $11.1 million a year earlier, according to the
Auckland-based company's annual report. Sales, mostly from milk, rose to $29 million from $10.3 million.
Pengxin entered the New Zealand dairy market with the controversial purchase of the Crafar farms in 2012, and has since
acquired 74 percent of Synlait Farm Holdings to gain control of 3,942 hectares of prime dairy farms in central
Canterbury, and agreed to acquire farms valued at $70 million in Northland, subject to approvals. It is also currently
awaiting Overseas Investment Office approval to buy the 13,800 hectare Lochinver Station near Taupo, reportedly worth
$70 million.
The Chinese company is also having its milk processed for the Chinese market, having signed a supply and purchase
agreement with Miraka for ultra-heat treated milk. It hired one of New Zealand's most experienced dairy industry
managers in Gary Romano to oversee New Zealand operations, after Romano left Fonterra Cooperative Group in the midst of
last year's whey protein scare, and signed a sharemilking agreement with state-owned Landcorp, the nation's biggest
farmer.
In its latest year, property, plant and equipment is valued at $412 million, up from $146 million a year earlier. Total
assets were $495 million while liabilities, including borrowings of $192 million, were $214 million.
Milk New Zealand turned to positive cash flow from operations of $2.36 million in 2014, from an outflow of $1.16 million
a year earlier.
Investment activity slowed to $74.9 million, including a $57.6 million cash component for Synlait Farms and other
property and equipment of about $9 million. In 2013, Investments amounted to about $160 million, including $146 million
on property and equipment.
Sales of milk were $28.8 million, up from $9.2 million, while livestock sales fell to $237,993 from $1.1 million.
Because of its farming operations, Milk New Zealand owns shares valued at $23 million in Fonterra and $827,569 in
Ballance Agri-Nutrients, the fertiliser cooperative. It also holds 41,380 shares in Canterbury's Central Plains Water,
valued at $1.9 million, via Synlait Farms.
(BusinessDesk)