Synlait plans new lab

00:59, Feb 14 2014

Synlait Milk is building a state-of-the-art full-service quality testing laboratory to help meet the higher quality standards for milk-powder products it exports around the world.

It is also increasing its administration facilities at its Dunsandel, Canterbury, plant with a $21 million total cost for the two projects.

The laboratory would further support its position as a supplier of milk powder-based value-added ingredients, and infant formula and nutritional products, the company said.

Since Fonterra's powder contamination scare in 2013 countries such as China have increasing their focus from on quality-check processes on food imports.

Synlait Milk managing director John Penno said the NZX-listed company's quality strategy had been to build in-house capabilities to support the testing requirements for the products it produces.

It had now significantly expanded the scope of the proposed laboratory from chemical and physical property testing to include full microbiological testing using the latest technologies.

In addition to the quality testing function there would now also be integrated facilities to support new product development. This would include the ability to conduct pilot scale trials, and allow for sensory analysis to ensure the needs of the company's customers were met.

The change in scope would give Synlait Milk greater control over the quality testing process and help ensure it could achieve the ever-increasing quality standards required by the world's most demanding customers, Penno said.

It would also reduce the need for external services and associated costs while reducing turnaround times.

"By building capability in quality management and establishing an on-site 'centre of excellence' that will be accredited to international standards, the company will strengthen its reputation with customers and the regulatory bodies governing the markets it serves," Penno said.

Synlait Milk had also changed the scope of its new administration facility, incorporating extra capacity to support growth in the business over time. This would cement Dunsandel as the long-term headquarters for Synlait Milk.

Due to the change in scope of both the quality testing laboratory and the administration facility additional capital expenditure was required.

The board had approved a total combined cost forecast to be $21m, with a completion date for both facilities now expected to be February 2015, Penno said.

Synlait Milk recently announced that due to continued improvements in its financial performance its forecast net profit for FY2014 will be significantly ahead of its prospectus forecast of $19.8m, and be range of $30m to $35m.


Fairfax Media