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A2 Milk more than doubles full-year profit

AAP  |  28 Aug 2018Text size  Decrease  Increase  |  
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New Zealand's A2 Milk Company has more than doubled its full-year profit thanks to continued strong demand for its baby formula in Australia and China.

A2 reported a net profit after tax of $NZ195.7 ($A177.9 million) for the year to June 30, up 116 per cent on the previous year.

The dual-listed company said its revenue jumped 68 per cent to $NZ922.7 million, led by the continued success of its baby formula, A2 Platinum.

A2 Platinum sales revenue rose 84 per cent to $NZ724.2 million, with the baby formula's market share strengthened to 32 per cent in Australia and 5.1 per cent in China.
New managing director Jayne Hrdlicka said the year had been "transformative" for the company.

"Significant progress has been achieved in Australia, China and the USA and important emerging market opportunities are starting to materialise," Ms Hrdlicka said in a statement.

"The ongoing momentum reflects the growing strength of our brand proposition, continued execution success in our end markets and in management of the supply chain."

milk

In Asia, revenue surged 163 per cent to NZ$233.6 million. The company credited increased brand awareness and its presence in 10,000 Mother & Baby stores in China for the success.

A2 has also expanded into the US market, with a presence in about 6,000 stores including Whole Foods, Costco and some Walmart stores.

The company says it has also extended strategic partnerships with other milk suppliers.

In July, A2 extended a supply deal with Synlait Milk by two years and raised its stake in the milk supplier to 17.4 per cent.

It has also secured partnerships with Fonterra and distributor China State Farm.

The recent deals will allow the company to expand but will also result in higher overhead costs and marketing expenses as a percentage of sales in 2019, the company said.

A2 Milk said it is seeing the "first signs of competition from a major international company in the A1 protein-free category" which was launched in March.

"There has been no apparent impact on our sales momentum as a consequence of this launch," it said, adding it is confident competition will ultimately expand the category over time.

A2 Milk has flagged further revenue growth for 2018/19, and said it expects the earnings-to-sales ratio to remain broadly consistent with the 31 per cent margin in the previous year.

It will not pay a dividend, unchanged from last year.

Performance highlights

  • Profit up 116 per cent to $NZ195.7m ($A177.9 million)
  • Revenue up 68 per cent to $NZ922.7 million
  • No final dividend, unchanged

 

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