Open Country Dairy, New Zealand's second-largest milk processor, posted a record profit last year as it sold more high-value products and strengthened its balance sheet.
Profit soared to $62 million in the year ended September 30, 2016, from $34.4m a year earlier, according to the Auckland-based company's annual report.
Open Country, 76 per cent owned by diversified agribusiness Talley's Group, pulled back its investment in property, plant and equipment by 44 per cent to $31.5m.
It shored up its balance sheet by repaying $35m of loans, ahead of the $14m it paid the previous year and reducing its bank debt to $80m.
While the company paid just 5.8 per cent more for milk, it received an extra 15 per cent from its customers as it sold more higher-value products.
"We have got bigger," said chairman Laurie Margrain.
"We processed more last year than we did the previous year, and we therefore got more operating leverage out of our stainless steel investment and the results should reflect that and did last year. We think it's a robust, satisfactory result.''
Open Country has yet to pay a dividend, eschewing payouts in favour of investment for future growth.
Founded in 2001 as a rival to dairy giant Fonterra, Open Country's first Waharoa cheese factory started production in 2004 and the company has since expanded throughout the country, building factories in Southland and Wanganui to enable it to source milk from the country's largest dairying regions.
In its early stages, the company's focus was on producing commodity products such as whole milk powder, however in recent times it has ramped up production of higher value products.
Open Country expects to pay its farmer suppliers around $6 per kilogram of milk solids for the current 2016/17 season. That's above the level most farmers require to produce a profit, following two years below breakeven level.