Infant milk pushes up A2 result

By Dairy News

CEO JAYNE Hrdlicka said the business results were driven by strong performance across their portfolio.

“The continued growth of our infant nutrition products was a strong contributor to the results with sales totalling $1.1 billion for the year — an increase of 46.9 per cent on the prior year,” Ms Hrdlicka said.

“This was driven by share gains in China and Australia.

“We achieved pleasing growth in our liquid milk businesses in particular within Australia and the USA –with total fresh milk growth of 22.9 per cent and revenue of $174.9 million across the group.

“We grew sales of other nutritional milk products by 17.3 per cent, delivering total sales of $65.8 million. This was driven by milk powders and supported by new products launched towards the end of FY18 and in the fourth quarter of FY19.”

Australia and New Zealand business revenue was $842.7 million, up 28.3 per cent, and EBITDA of $388.2 million represented an increase of 48.1 per cent.

It had $NZ413.6 million ($A391 million) in earnings before interest, tax, depreciation and amortisation, which was up 46.1 per cent.

Ms Hrdlicka said the company was proud of its results in her first year as chief executive delivering record profit and market share.

Revenue for the 12 months to June 30 jumped 41 per cent to $NZ1.3 billion, with revenue from China and other Asian countries increasing 74 per cent to $NZ405.7 million.

CMC Markets chief market strategist Michael McCarthy said the result was slightly below analysts’ forecasts and noted the stock was close to its record high.

A2 shares are still up more than 30 per cent for the year and trading at 42 times earnings.

Shares of rival infant formula makers Bellamy’s, Bubs Australia and Wattle Health were down between 1.2 and 3.1 per cent at 10.51 am.

A2 said it would exit the United Kingdom liquid milk business because there was more opportunity in greater China and the United States.

US sales grew 160 per cent to $34.6 million, although the segment had a earnings loss of $44 million as A2 invested in distribution and brand awareness.

In China, A2’s earnings were up 52.4 per cent to $123.9 million and A2 said the business was expanding its presence in mother-and-baby stores in the country.

In Australia, A2 said A2 Milk was the fastest-growing fresh milk brand in the country and the leading premium milk brand, holding a record 11.2 per cent market share.

A2’s FY19 results

  • Full-year revenue up 41.4 per cent to $NZ1.3 billion ($A1.2 billion).
  • Net profit after tax up 47 per cent to $287.7 million ($A272.3 million).