Synlait Milk has reported a fall in full-year profit as its costs rose despite higher revenue.
The dairy company's net profit for the year ended July was $75.2 million compared with $82.2m the year before. The result was at the lower end of its forecast range.
Revenue rose 27 percent, but its depreciation and financing costs offset that as the company expanded for future growth.
"Our net profit performance did reduce reflecting investments made in new facilities and acquisitions over the past two years to achieve our growth ambition," chair Graeme Milne said.
The Canterbury-based Synlait makes infant formula for major shareholder, A2 Milk, but has been diversifying into fresh milk and other dairy consumer products for South Island supermarkets.
Its higher costs stemmed in part from buying cheese maker Talbot Forest, and smaller rival Dairyworks, which makes butter, cheese, and other dairy produce.
Synlait said it had built up higher inventories of some products to ensure there were sufficient stocks to cope with any disruption to supply chains caused by Covid-19.
The company has been expanding facilities at its home base of Dunsandel in Canterbury, and its new processing plant in Pokeno, south of Auckland.
Synlait is waiting for the outcome of a Supreme Court hearing into historic covenants covering the Pokeno site. The company noted the issue as a contingent liability - one that might cause a future cost - but it did not set aside any sum.
It confirmed its final payout for the just-finished season at a total of $7.30 a kilo of milk solids, while forecasting a payout of $6.40/kg for the current season.
It said it also expected this year's profit to match or even slightly exceed the year just ended.
Milne said the company had laid the foundations for future growth.
Synlait was finalising a long-term supply agreement with a new, unidentified, multinational customer for packaged products which would lift its earnings from 2023.