Infant formula is still making a splash as profit grows for Synlait and Clover
Health & Biotech
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Shares in Synlait Milk jumped after the New Zealand-based infant formula company posted strong revenue growth numbers for the latest half-year.
The result came on the same day that China-focused infant formula exporter Clover Corporation (ASX:CLV) reported a jump in half-year profit and declared an interim dividend.
Synlait shares (ASX:SM1) closed up 15 per cent at $8.72 on Wednesday — valuing the company at $570 million.
Revenue lifted 52 per cent to $NZ439.3 million ($460 million) and profit jumped 283 per cent to $NZ40.6 million for the six months to January 18.
CEO John Penno said the strong earnings growth was driven by increases in sales and improved margins.
Synlait Milk has exposure to the growing China market through its relationship with the a2 Milk Company (ASX:A2M).
The company is a2 Milk’s exclusive manufacturer for Australia, New Zealand and China. a2 last year bought a 8.2 per cent stake in Synlait.
Clover Corp profits jump
Meanwhile, China-focused Clover gained 23 per cent to 79c after reporting a jump in half-year profit and revenue and declaring an interim dividend of 0.5c per share.
Clover is worth about $130 million.
The Chinese market for infant formula “continues to improve with little change in Chinese regulations over the past six months providing manufacturers with the confidence to produce and deliver into China”, the company said.
Clover’s profit jumped 209 per cent to $3.2 million for the six months to January. Revenue was up 60 per cent at $31 million.
“Clover has benefited from the culmination of three years’ work across the business to deliver new products to market, improved manufacturing and efficiencies through volume and raw material supply,” the company said.
There had been “a concerted effort to take products into new territories and market segments without losing focus on the traditional infant formula market”.