a2 Milk Company smashes its profit and its shares go nuts

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a2 Milk Company, the infant formula maker a2 Milk whose sales have been booming in China, today posted a 150% jump in profit to $98.5 million for the first half.

Revenue was up 70% to $434 million on strong growth in sales of the a2 Platinum infant formula in Australia and China.

In early trade, a2 Milk shares were up 16.5% to $10.150.

“Our financial performance reflects the growing strength of our brand proposition, the successful execution of in-market growth strategies and the continued strong performance of our supply chain,” says Managing Director Geoffrey Babidge.

“Consumer interest in the benefits of dairy-based products free of the A1 beta-casein protein type continues to grow. We invest strategically in this aspect of the business through marketing, promotion and education programs in each market.

“An especially pleasing aspect of our performance was the continuing strong growth in market share and sales of a2 Platinum infant formula in China, along with our success in adapting to the evolving regulatory environment in that market.

a2 Milk Company also announced a new strategic relationship with New Zealand’s Fonterra Co-operative Group Limited to ensure future supplies of milk.

The deal links Fonterra’s global milk pool and supply chain, manufacturing capability and in-market sales and distribution capacity with a2’s brand strength and capabilities.

Fonterra will now begin conversations with its farmers to source an A2 milk pool in New Zealand, which is intended to significantly expand over time to help meet the growing demand for a2 products. A similar milk pool in Australia will also be developed.

Fonterra CEO Theo Spierings says the partnership is intended to fast-track market growth and this creates opportunity for farmers to
create additional value from their milk.

a2 Milk’s first half results at a glance:

Source: a2 Milk