The a2 Milk Company reports higher results
The a2 Milk Company has delivered a further step upward in performance in the first half of the 2017 financial year, with operating earnings and net profit at higher levels than those for the full 2016 financial year.
The half year performance reflects outstanding results from the Australia/New Zealand (ANZ) and China businesses, driven primarily by continuing strong growth in demand for a2 platinum infant formula. Revenues increased by 62% and 348% in Australia and China respectively, and operating EBITDA by 104% and 1,021% respectively. The growth rate in part reflects inventory shortages experienced during the pcp.
Results in the United Kingdom and United States also improved. The UK business increased sales and achieved positive operating earnings in the period, while the US business achieved increased distribution and higher rates of sale in a number of key accounts.
Managing director Geoffrey Babidge, says, “The half year results show continued progress against the company’s objective of building a global brand based on the health and digestive benefits of nutritional products containing only the A2 beta casein protein, free of the A1 protein.
“This has involved continuing to grow the established positions in fresh milk and infant formula in Australia while also investing in the key international growth initiatives in China, the United States and the United Kingdom.
“The outstanding aspect of our half year performance was the continuing growth in a2 Platinum infant formula in both Australia and China, through a multi-channel strategy involving a combination of local distribution, e-commerce and overseas shopping (‘Daigou’) traders. The growth is driven predominantly by the growing recognition and trust of the a2 brand amongst Chinese consumers, reflecting a strong communications platform that speaks directly to mothers and to health care professionals in both Australia and China.
“Whilst the growth in demand was evident across the half year, there was a marked increase in infant formula sales in the second quarter corresponding with the phasing of key sales events in China and an increase in market share in both Australia and China. This was achieved whilst maintaining a prudent approach to the management of production and inventory in recognition of foreshadowed changes in regulations for infant formula sold in China.”
The increase in corporate and other costs in the half is primarily a result of increased spend on business development and research and development costs associated with a higher level of business activity.
Cash on hand at 31 December 2016 increased significantly to $108.4m (€102.1m), reflecting the increased earnings, together with pro-active management of working capital, particularly infant formula inventory levels, during the period.
