Specialty dairy company A2 Milk’s full-year profit is up by a third, driven by strong growth in its China section, despite challenging market conditions.
Though it was expecting growth in the Chinese market to slow next year.
Key numbers for the year ended June compared with a year ago:
- net profit $155.6m vs $114.7m
- revenue $1.59b vs $1.45b
- underlying earnings $219m vs $196m
- no dividend vs no dividend but a maximum $150m share buyback.
Chief executive David Bortolussi said sales from the company’s China label infant milk formula (IMF) exceeded its sales in English-speaking countries for the first time, with the total sales for infant milk formula totaling more than $1.1 billion.
“I’m proud of what our team has achieved this year, growing sales by 10 percent while the core China IMF market declined by 14 percent is a remarkable achievement,” he said.
“The China IMF market has become increasingly challenging as a result of lower birth rates and increased competitive intensity.
“Notwithstanding, we are well-positioned to continue to invest and grow share in FY24 to emerge in a stronger position when the market recovers.”
Bortolussi said achieving reregistration of the company’s China label IMF product was critical to maintaining access to the company’s domestic market.
Bortolussi expected to see a double-digit decline in the Chinese infant milk formula market in the 2024 financial year, but said the company expected to achieve “low single-digit group revenue growth”.
“This is due to volume declines driven by the rolling impact of fewer newborns in recent years on later-stage IMF products, and a lower number of newborns expected in CY23 due to the lagged impact of Covid-19 prior to an expected increase in CY24,” he said.
“The company will continue to execute its growth strategy in FY24, focusing on growing share in China IMF as well as commercialising opportunities in adjacent categories and new markets.”
A2 expected to continue to gain market share in IMF, with growth dependent on the extent of market share gains in a declining market, he said.