Synlait Milk says costs for expanding its laboratory and administration will more than double as it allows for increasing production and ramps up testing of its products.
The Chinese-controlled, Rakaia-based company’s expanded laboratory and administration centre will cost $21 million, up from projected cost of $8.4m.
The new laboratory will include microbiological testing to help ensure it can achieve the «ever increasing quality standards require by the world’s most demanding customers,» the milk producer said in a statement.
Last month Synlait said China sales of infant formula and nutritional products may fall short of its 10,000 metric tonne target because stricter regulations had disrupted that market.
New Zealand’s biggest dairy producer and exporter Fonterra spooked dairy markets last year with a precautionary recall of whey protein concentrate thought to be contaminated. Later tests proved the bacteria found were harmless.
China is particularly sensitive to dairy safety concerns after melamine-tainted infant milk formula caused the deaths of six children and sickened 300,000 others in 2008.
The expansion of its Dunsandel-based administration facility is in anticipation of the company’s growth, and cements Synlait headquarters in the South Canterbury town, it said.
Synlait reiterated its forecast for earnings to be between $30m and $35m, up from its prospectus forecast of $19.8m.
The company listed on the New Zealand stock exchange in last July.
The shares fell 1.4 percent to $3.65.
Source: 3news