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Highlights
- The dairy sector is among leading goods export sectors in NZ.
- The a2 Milk company plans to rebuild itself into a sustainable and innovative growth company.
- Synlait introduced its first consumer food product - Synlait Swappa Bottle.
Dairy makes a substantial contribution to the economic activity across regional NZ.
Nearly 80% of New Zealand’s total exports come from primary industries that include agriculture, horticulture, fish, etc. Dairy accounts for 33% of total exports.
As per the Ministry of Primary Industries’ June 2021 ‘State of Primary Industries’ report, the dairy sector accounts for $20.1 billion worth of primary industry exports in 2020 with the forecast of dairy exports worth $22 billion in 2025.
Let’s glance through the performance of these 3 NZX dairy stocks.
Image source: © 2021 Kalkine Media, Data source- EODHD/Others
The a2 Milk Company Limited (NZX:ATM; ASX:A2M)
NZ’s dairy nutrition company, the a2 Milk Company, witnessed a challenging FY21 with its results being impacted due to the disruption of the cross-border trade and a flat China market growth. The Group took many initiatives to address issues faced during the period while reviewing its growth strategy.
RELATED READ: Would The a2 Milk’s (NZX:ATM) latest strategy drive growth across multiple horizons?
Why are NZX dairy stocks vital to the nation’s economy?
The Company plans to follow a stabilise and reset strategy in FY22, followed by a full-scale rollout of growth and other initiatives in FY23-24. Later in the period FY25-FY26, it wants to deliver next-wave growth from innovation and supply chain transformation.
ATM ended the day 1.21% in red to close at $6.51.
Fonterra Co-operative Group Limited (NZX:FCG)
Auckland-based dairy exporter, Fonterra, provided a global dairy update for October. The Group reported lower milk production volumes across New Zealand and Australia while milk production in the US stayed flat.
DO READ: Did 3 NZX food stocks feel the heat of highest inflation?
Fonterra’s milk collection for NZ was 3.8% lower at 173 million kgMS in September while for Australia, it was 4.3% lower compared to last season at 10.4 million kgMS. Total NZ dairy exports rose by 0.6% in September compared to the same period last year.
FCG ended the day 0.31% in red to close at $3.2.
Synlait Milk Limited (NZX:SML)
Dairy processing company Synlait Milk unveiled its first consumer foods product - Synlait Swappa Bottle - last month. The product is reusable and is a step towards eliminating plastic waste.
DO READ: Would these 5 NZX penny stocks take the market by storm in 2022?
Synlait expects its NPAT to return to robust profitability in FY22. The Group expects its performance to build up in FY23 as its new multinational customer at Synlait Pokeno progresses, and its Liquids and Consumer Foods businesses continue to flourish.
SML ended the day 0.86% in red to close at $3.45.
Bottom Line
Listed dairy players are taking various measures to regain their market share after being impacted by COVID-19-led disruptions.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)