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Tuesday 28 June 2022

Synlait shtum on $8.8m Talbot Forest court action

25th March 2022 By Staff Reporter | | @foodtickernz

NZX-listed dairy company Synlait is not commenting on the $8.8m court case it has taken out against the former owners of Talbot Forest Cheese Co.

Synlait’s deal for speciality cheese maker Talbot Forest has turned sour.

The Dunsandel-headquartered dairy company bought the speciality cheese business from founders Angela Veale and Paul Fitzsimons in 2019 for $38.5m as part of a diversification drive out of milk processing.

It also completed the $118m acquisition of consumer cheese and butter manufacturer Dairyworks, and subsequently rolled the two businesses into a new consumer dairy food division, taking in the Talbot Forest, Alpine, Rolling Meadow and Dairyworks brands.

However, in its FY21 results released in September last year, Synlait said its Dairyworks consumer food division had underperformed due to Talbot Forest operating at a “significant loss”.

In the 12 months to July 2021 – its first full year of contributions – the division missed its earnings forecast of between $15m – $20m, coming in with EBITDA of $10.3m.

In an effort to stem the losses, Synlait shuttered the Talbot Forest factory for two years so it could work to standardise cheese milk for delivery to the factory and bring it back to commercial production levels – and profitability – in 2024.

The case, Dairyworks Ltd v Geraldine Cheese Company Ltd, William Paul Fitzsimons & others, is before the High Court in Timaru, but it is being handled through the High Court at Christchurch.

According to reports, it is an $8.8m court action.

“As this matter is before the court it is inappropriate for us to provide any comments on the legal proceedings,” a statement from Synlait said.

“However, as we have previously communicated, an investment will be made over the next two years to standardise cheese milk for bulk cheese manufacture at Talbot Forest Cheese. Cheese manufacturing is expected to reach commercial levels again in FY24.

“Talbot Forest Cheese is part of Synlait’s diversification strategy, and our ambition is to become the second-largest player in the consumer dairy food category.”

Talbot Forest Cheese has had a brand refresh and is still being produced by the company in the interim.

Synlait will announce its half-year results for the six months ending January 2022 on Friday 1 April.



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