Drugmaker Center Laboratories Inc (晟德大藥廠) expects increased earnings contribution from its venture into the dairy market as it is raising its production capacity to tap into the Chinese market for powdered milk and baby formula.
Ausnutria Dairy Corp Ltd (澳優乳業), a Hong Kong-listed Chinese company in which Center Laboratories has accumulated a 40 percent stake since investments began in 2014, would see its yearly production capacity increase by 90,000 tonnes after a 110 million euro (US$123.34 million) plant in Heerenveen, the Netherlands, becomes operational next quarter, the company told a news conference in Taipei.
Ausnutria Dairy last month finalized a NT$450 million (US$14.94 million) deal to acquire Australia Dairy Park Pty Ltd (ADP) and completed a NT$200 million deal to buy a 50 percent stake in dairy product brand Oz Farm, Center Laboratories said.
Following the launch of the two-child policy in China, the nation’s market for baby formula is expected to reach NT$450 billion by 2020, Center Laboratories chairman Lin Jung-chin (林榮錦) said.
However, as the global market for powdered cow’s milk is largely dominated by a few century-old European brands, the company has set its sights on securing a foothold in the powdered goat’s milk segment, Lin said.
“Our smaller scale is advantageous, as we are well-positioned to adapt to market changes,” Lin said, adding that the company is ready to capitalize on mistakes made by its competitors.
He added that the market for goat’s milk in China is projected to expand at a 30 percent compound annual growth rate, from NT$22.6 billion this year to between NT$67.8 billion and NT$90.5 billion by 2020.
Ausnutria Dairy reported that its net income last quarter rose 22.5 percent annually to NT$294 million, with sales during the period rising 30.3 percent annually to NT$3.4 billion.
Center Laboratories during the same period posted a net loss of NT$21 million, with sales rising 16.81 percent annually to NT$3.81 billion.
Lin said he is confident that the company’s earnings would continue to improve as its dairy venture begins to bear fruit.
He said that earnings last quarter had improved from a net loss of NT$59 million a year earlier and that the company’s dairy venture has enabled the exploration of other business opportunities, such as health supplements.
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