New Zealand dairy processor Synlait has reported a net profit after tax of NZ$12.3m for the first half of the 2016 financial year, primarily due to increased sales of canned infant formula.

Nutritional product sales for the six months ending January were 7,498m tonnes, a 155% increase on the entire previous financial year.

“The result we’re expecting is an almost fourfold increase in canned infant formula sales in FY16 [current financial year], compared to FY15. Concurrently, by the end of FY16 we will have strengthened our balance sheet by restructuring our working capital requirements and repaying debt,” Synlait Chairman Graeme Milne said.

“This position provides a base for potential further capital expansion.”

Revenue of NZ$213.5m increased 8.1% on last year’s first half results, as a lower New Zealand dollar helped offset the dairy downturn.

The Canterbury-based milk company is well regarded among many dairy farmers in New Zealand for its innovative range of value-added dairy products it has launched over the last decade, aimed mostly at the Asian consumer.

Similar to Westland Milk Products and Open Country Dairy (the country’s second largest dairy manufacturer), it is understood there is a significant waiting list of Fonterra suppliers looking to join Synlait, who cannot yet take on more supplies owing to capacity issues.

“More than 50% of our suppliers will receive a premium payment in FY16, primarily for creating value on their farm through our Lead With Pride and Special Milk programmes,” said Synlait Managing Director and CEO John Penno.

This will be worth approximately NZ$6m in premium payments to suppliers during this financial year.

“The impact of prolonged low dairy commodity pricing, however, continues to hit home for our suppliers. We remain committed to supporting them where we can and for the second year running we’re advancing a higher proportion of our final milk price than would be normal,” said Penno.