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a2 Milk Company's sales of infant formula to China have gone ballistic

Four-year-old Chinese boy Huang Yang plays with a beluga whale in Qingdao of Shandong Province, China. China Photos/Getty Images

The a2 Milk Company hasn’t yet found a ceiling to demand for its infant formula.

Profits for the half-year are up almost 800% to $NZ10.1 million as sales of the a2 Platinum infant formula, seen in Asia and China as clean and safe, exceed expectations.

Overall revenue increased 86% in the six months to $NZ139.1 million.

A short time ago, a2 shares were up 3.2% to $A1.93.

Demand is so strong that competitors are emerging quickly. Last month vitamin make Blackmores, in a joint venture with Bega Cheese, launched its own infant formula into an eager market with safeguards designed to stop opportunistic buying and re-selling.

The a2 Platinum infant formula sales in Australia, New Zealand and China grew 340% to $NZ73.9 million. Revenue from China was up 680% to $NZ8.4 million.

Demand was so high that the company had stock shortages in the first four months of the half year and had to increase production.

The company is in the process of further building milk supply in New Zealand so it can increase production of infant formula in the 2017 financial year.

The majority of sales are still through Australian grocery and pharmacy channels but much of that is bought off the shelves, re-sold and shipped to China.

The company says it’s building direct sales into China via e-commerce channels and mother-baby retail stores.

a2 Milk has upgraded its full year forecast to revenue in the range of $335 million to $350 million.

Managing director Geoffrey Babidge says he sees growth in infant formula sales continuing.

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