WELLINGTON, Sept 19 (Reuters) - New Zealand dairy producer Synlait Milk Ltd SML.NZ on Monday reported a sharply higher full year net profit on strong demand for its products, although it warned that may moderate in the current financial year due to changing Chinese regulations.
The company, which is part-owned by China's Bright Dairy & Food, said net profit after tax was NZ$34.4 million for the year to July 31, more than triple the prior year when it was NZ$10.6 million.
Synlait reported an almost fourfold increase in canned infant formula volumes as well as growth in powder and cream product volumes.
China remains a key market for Synlait and it noted changes in the Chinese regulatory framework may moderate canned infant formula growth in the current financial year.
China has recently issued further regulations to tighten supervision of baby formula, requiring producers to register and secure permits to sell their products. The quality of milk and infant formula in China has been a sensitive topic after a series of scandals in 2008 when milk contaminated by the industrial chemical melamine killed at least six children and caused thousands to fall ill.
Synlait provided no specific guidance but underscored it is well positioned to comply with the regulations and it expects the market to "normalize" in the longer term.
It also announced an accelerated pro-rata entitlement offer to eligible shareholders to raise approximately NZ$98 million. The funds will be used for a mix of debt repayment and funding of capital growth projects. The company is currently on a trading halt, pending the results of the bookbuild for the offer.