New Zealand infant formula and dairy ingredients group Synlait Milk has reported higher annual profits but said changes to regulations in China hit sales, which came in below target.

Synlait, which listed two months ago, booked net profit after tax of NZ$11.5m (US$9.5m) for the year to the end of July, up 4.4% – and above the NZ$10.8m it forecast in its IPO prospectus.

An increase in margins from improved sales of “value-added” products helped profits, Synlait said.

Revenue was also up, increasing 11.5% to NZ$420m. However, Synlait had forecast revenue of NZ$426.4m.

“We remain confident of meeting our long term objectives for our infant formula and nutritionals business despite missing volume targets in FY2013 primarily due to market disruption caused by Chinese regulatory changes at the end of the financial year. We are well positioned to take advantage of new regulations taking place in China that focus on quality standards, product pricing as well as a consolidation of brands,” Synlait MD Dr John Penno said.

China’s Bright Dairy has retained a 39% stake in Synlait. Dutch dairy giant FrieslandCampina also acquired a 7.5% holding in Synlait when it listed in July.

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