Source: Radio New Zealand
123RF
Infant formula maker A2 Milk showed a solid lift in first half profit on the back of double digit growth in sales allowing an increase in dividend.
Key numbers for the six months ended December compared with a year ago:
- Net profit $112.1m vs $102.5m
- Revenue $993.5m vs $836.5m
- Operating earnings $155m vs $130.9m
- Net cash $896.9m vs $1.01b
- Interim dividend 11.5 cents per share vs 8.5 cps
- Forecast mid-teens revenue growth, increased full year profit
Sales of infant milk formula (IMF) to China led an overall near 19 percent rise in revenue, boosted by its acquisition of a manufacturing plant at Pokeno, and further improvement in the fledgling US market.
“We continue to execute our growth strategy with a focus on maximising opportunities in China infant milk formula, adjacent categories and new markets,” chief executive David Bortolussi said.
“Infant milk formula remains central to our growth strategy and continues to outperform the China market, delivering 13.6 percent year-on-year revenue growth.”
Bortolussi said English label IMF sales were significantly stronger through on-line retail platforms, while there had been a stabilisation of the once important daigou channels – sales by third parties of A2 IMF.
Fresh milk sales improved in Australia and the United States, while the company looked to diversify with new nutritional products.
“Recently launched kids and seniors nutrition products have accelerated our growth in other nutritionals, strengthening our position in these growing and exciting categories.”
Bortolussi said the US operation was close to break even after posting initial big losses and the company hoped to get approval from the Food and Drug Administration to sell infant formula in the US.
He said the Pokeno manufacturing plant acquired last year was securing and diversifying its supply chain last year, and the company was shifting more production to the plant from Synlait Milk’s Canterbury plant.
Bigger sales and profits
Looking forward A2 expected double digit revenue growth, with a full year profit ahead of last year’s $202.9m.
“Our upgraded outlook means we are now on track to achieve our $2 billion medium term sales ambition in FY26, a full year ahead of plan,” Bortolussi said.
The company increased its interim dividend and reaffirmed plans for a $300m special dividend from its $897m cash holdings.
Forsyth Barr senior analyst Matt Montgomerie said the result was strong and better than analysts had been expecting, and noted the company had a track record of exceeding it forecasts.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
