Synlait Milk hikes forecast payout to farmgate to $8kgms, affirms revenue forecast

Synlait Milk, the local milk processor which listed on the stock exchange in July, has followed rivals Fonterra Cooperative Group and Westland Milk in hiking its forecast payout to farmers, though it's keeping its earnings forecasts intact.

The Rakaia-based company expects to pay $8 per kilogram of milksolids in the 2014 season, up from a previous forecast of $7/kgms, it said in a statement. The dairy firm also lifted its advance rate 50 cents to $5/kgms. Despite the increased cost of production, the milk processor is sticking to its prospectus forecast for sales of $524.4 million and underlying pre-tax earnings of $32.1 million in the 2014 year.

"Higher than forecast revenue from high commodity prices and additional processing volumes mean we remain confident of achieving our FY2014 earnings targets at these increased milk prices," managing director John Penno said.

Last week the dairy company said it will process more milk than expected in the current season, meaning it will seek an allotment of regulated raw milk supply from Fonterra Cooperative Group.

Shares in Synlait Milk gained 1.9 percent to $3.30 today, and have jumped by 50 percent from the $2.20 offer price.