a2 Milk has posted a 290% profit increase thanks to strong sales in China

Kevin Frayer/Getty Images

Chinese demand for Australian dairy and infant formula is intact, if the a2 Milk Company results are a reckoner.

The company posted a profit of $NZ39.4 million ($37 million) in the six months ended December 31, up a whopping 290% from a year earlier followin strong sales of its infant formula in China and Australia. Total revenue for the ASX-listed New Zealand company was up 84% to $NZ256.1 million. However, it sees infant formula sales lower in the second half in the second half.

The company’s performance stands in stark contrast to rival Bellamy’s whose spectacular growth via China has suddenly stalled, after the country changed regulations requiring registration.

Australia and New Zealand revenue increased by 62% to $NZ206.60 and China sales grew to $NZ37.70 million, it said.

After Bellamy’s woes hit, a2 Milk released a statement confirming that the business continues to trade very strongly, reflecting significant year-on-year growth in its infant formula business. a2’s has gained acceptance in China as a source of clean and green infant formula.

“Given that the timing of major selling events in China is weighted towards the first half, and as a result of our prudent approach to inventory management, the Company is anticipating lower infant formula sales during the second half relative to the first half, although they will be materially higher than in second half of 2016,” a2 Milk said.