The global financial crisis has claimed another capital works project, with New Zealand Dairies announcing the deferral of expansion plans for its Studholme factory.
The company was at pains to stress it was financially sound, but tight international credit markets prompted majority shareholder, the Russian-based Nutritek Group, to abandon plans for a capital expenditure of up to $100 million.
It was understood New Zealand Dairies (NZDL) had plans to build an anhydrous milk fat plant or a second drier.
When the plant was built three years ago, plans included provision to incorporate a second drier.
Chairman Peter Lavery said yesterday the company's continuing success was not dependent on expansion.
It was generating its own cashflow, and did not require any cash injection.
Speaking from Australia, Mr Lavery said in an interview the exact form of the capital expansion had not been decided, but given the global situation it was prudent not to add new debt to its balance sheet.
The South Canterbury plant was operating at close to capacity, with milk from contracted suppliers and up to 50 million litres a year from Fonterra which was supplied under the Dairy Industry Restructuring Act.
Mr Lavery said the plant had performed well this season and it expected to have sold and shipped all this year's production in time for the new season in August.
Another independent dairy company, Synlait, based in Canterbury, last month announced plans to spend $70 million building a second drier at its Dunsandel plant.