Ann: 2017 Annual Meeting Presentation & Market Update, page-157

From Sydney Morning Herald Business page.

• 2:51pm

Here's some more on A2 Milk, which, as we mentioned very early on in today's session, is one of today's stand-out performers...

The a2 Milk Company, is examining the potential to pay dividends after stellar growth has left some investors questioning whether they can enjoy some of the cash spoils from the infant formula boom.

The NZ-based company's spectacular share price growth has left some sceptics wondering when conditions will sour. But on Tuesday A2 continued to prove the doubters wrong, issuing a trading update that showed strong growth in Australia, New Zealand and China had pushed up net profit by 138 per cent in the first four months to October to $NZ52.3 million.

EBITDA rose 120 per cent to $NZ78.4 million while revenue climbed 69 per cent to $NZ262.2 million.

The company noted that cost increases were putting pressure on marginsbut it had been more than offset by favourable currency movements due to a weakening New Zealand dollar.

"Each part of the business is performing better than expected," A2 Milk chief executive Geoffrey Babidge said.

The company did not forecast full year earnings but did flag higher marketing expenses in the second half to drive its growth in China and the US.

Mr Babidge told The AFR after the group's annual meeting on Tuesday the board was assessing potential capital management initiatives. The company does not currently have a dividend policy.

"It's [dividends] under management consideration. Currently the institutional investors are supportive of the company to identify opportunities to find growth from surplus cash flow [over a dividend]," he said.

"Some retail investors would be keen for some sort of dividend policy."

A2 Milk shares have jumped 5.1 per cent to $7.43, not far short of its October record of $7.91.


A2 Milk's growth has come from surging demand for its infant formula products, which account for 72 per cent of revenue.  Photo: Alasdair James