The after tax profit for the year ended July 31 was $19.6 million, compared to the pre-listing forecast of $19.7m.
Revenues were much higher than forecast because of a period of very high world market prices earlier in the financial year but achieving targeted premiums and gross margins for specialist ingredients during that time had proved challenging, Synlait Milk chairman Graeme Milne said.
The development of the group nutritionals business had also been set back by regulatory change in the important Chinese market.
Those factors meant profitability gains in the first half of the year had been largely eliminated.
At one stage, Synlait Milk revised its after-tax profit forecast to between $30m and $35m, later reducing it to be between $25m and $30m then warning in late May that it would be back in the $17.5m to $22.5m range.
Total sales were $600m, up from $420m a year earlier, and up from the pre-listing forecast of $524m.
Operating cashflows were strong at $58.6m, compared to an outflow of $47m in 2013, though interest costs were not included here but in financing cashflows.
Synlait made interest payments of $7.2m which were well covered (4.5 times) by earnings before interest and tax (EBIT) of $32.4m.
Though the year was challenging, the progress made with key customers had given the board and management confidence for the future, Milne said.
The customer and marketing development strategy was progressing faster than had been planned, managing director John Penno said.
Synlait was producing products for four of the world’s leading infant formula companies and was talking to all of them about increasing volumes, manufacturing higher value products, and collaborating on research and development opportunities.
Synlait Milk had a conditional agreement to buy a 25% shareholding in Chinese group Sichuan New Hope Nutritional Foods Co, an infant formula distributor.
At balance date, Synlait had total assets of $476.8m, of which $183.1m was funded by equity. Borrowings were $154m.
The company won’t be paying a dividend, in line with the stated strategy of investing profits in the business.
Synlait shares rose 1c to $3.31 in NZX trading after posting its result.
