Parmalat eyes Asian growth

18 May, 2017 04:00 AM
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Port Adelaide AFL player Chad Wingard with the Oak brand prominent on the guernsey. Parmalat Australia owns the Pauls milk brand and Oak flavoured milks and CEO Craig Garvin says the Australian market is tough. Getty Images
We've picked up some new farmers. We're interested in long-term relationships.
Port Adelaide AFL player Chad Wingard with the Oak brand prominent on the guernsey. Parmalat Australia owns the Pauls milk brand and Oak flavoured milks and CEO Craig Garvin says the Australian market is tough. Getty Images

Parmalat Australia, which owns the big-selling milk brand Pauls, Vaalia yoghurt and Oak flavoured milk, produced a 9 per cent rise in annual revenues to $1.8 billion in 2016 in a fiercely competitive sector where large rival Murray Goulburn has been in turmoil.

Parmalat, which is owned by French dairy giant Lactalis, has a resilient Australian business where Pauls is the No.1 white milk brand, and has also increasingly been making inroads in Asia, where the UHT long-life version of Pauls is the No.1 seller in Hong Kong.

Parmalat Australia chief executive Craig Garvin said conditions were tough in the Australian market and the company was focusing on building up its branded products and eyeing more exports to Asia.

"We're backing our brands, trying to make our business as efficient as we can, taking costs out and making quiet acquisitions," Mr Garvin said.

Oak has gained extra prominence through a sponsorship deal with Port Adelaide in the Australian Football League, where the Oak logo is emblazoned on the Port players' guernsey.

An extra spotlight was on Port on Sunday as it played in the AFL's historic first match in Shanghai in China.

Exports are continuing to increase and Mr Garvin said the momentum was accelerating in the Asia strategy.

Parmalat Australia's net profit after tax in calendar 2016 was $28.5 million, to be 19 per cent lower than a year ago as the firm stepped up its spending on brand building and advertising.

Sales revenue was $1.79 billion in the 12 months ended December 31, 2016 compared with $1.65 billion in 2015.

Earnings before interest, tax, depreciation and amortisation were $92.5 million in 2016 compared with $99.2 million according to the financial statements lodged with the Australian Securities and Investments Commission.

Long-term partnerships

Mr Garvin didn't want to comment on the impact of the broader dairy sector stemming from the strife that Murray Goulburn found itself in.

But one of the knock-on impacts was that Parmalat had been able to recruit extra dairyfarmer suppliers.

"We've picked up some new farmers. We're interested in long-term relationships," Mr Garvin said.

Parmalat Australia, which has a workforce of 2350 people, has a range of speciality cheeses under the Lemnos, President and Galbani brands and sells Ice Break iced coffee.

It expanded in early 2016 with the acquisition of Fonterra's Tamar Valley yoghurt and dairy dessert.

Mr Garvin said investing behind the company's brands was an important part of the strategy.

"We're sticking to our long-term strategy. We're continuing to invest in the Australian market," Mr Garvin said.

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