The a2 Milk Company, an ASX-listed infant formula and dairy business based in New Zealand, is exceeding expectations in China, despite the country’s falling birth rate. The company anticipates higher revenue this year, even as China’s birth rate has plummeted to its lowest level since 1949. a2 Milk specialises in producing milk products that contain only the A2 type of beta-casein protein, which some studies suggest is easier to digest. They offer a range of products, including infant formula and milk powders.
In the six months leading up to December 31, a2 Milk reported an 18.8 per cent increase in revenue, reaching $NZ993.5 million ($849 million). Profit rose from $NZ102.5 million to $NZ112.1 million during the same period. However, these figures do not account for a $NZ103 million loss from the sale of Mataura Valley Milk. Chief executive David Bortolussi said the company’s strong performance had enabled them to upgrade their full-year guidance and declare an interim dividend.
Analysts believe the company’s success is due to increasing its market share and offering premium products. Infant milk formula revenue increased by 13.6 per cent, with English-label products rising by 20.9 per cent and Chinese-label products by 6.5 per cent. To support its expansion, a2 Milk acquired the Pokeno dairy manufacturing facility in New Zealand, which will help with Chinese label registrations.
Shares in a2 Milk jumped sharply and closed up 4.6 per cent, or 39¢, in the late afternoon at $8.91. They have increased 25 per cent over the past year. The company will pay a fully franked NZ11.5¢ interim dividend.
