**A2 Milk Profit Up by 7.7%, China Performs Strongly**
*NZ Herald - 19 Aug, 2024 07:06 AM*
*2 mins to read*
Infant formula company A2 Milk increased its annual net profit by 7.7% to $167.6 million for the year ending in June, driven by a strong performance in its main market, China.
Market expectations were for A2 Milk to report a net profit of about $172 million, up from $155.6 million in the previous year.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose by 6.9% to $234.3 million, with an EBITDA margin of 14.0%, up 0.2 percentage points.
A2 Milk’s closing cash position was $968.9 million, an increase of $211.7 million from the previous year. Revenue grew by 5.2% to $1.675 billion.
Looking ahead, A2 Milk expects revenue growth in the mid-single digits and a similar EBITDA margin to that of 2024.
The company grew total infant formula sales by 4.6% despite a challenging China market, which declined by 10.7% in value.
“Conditions in the China IMF market remain difficult, impacted by the cumulative decline in China newborns over the past few years, increased competitive intensity, market-wide transition to new GB standard products, and macroeconomic conditions,” the company said.
A2 Milk achieved a top-five brand position in the overall China IMF market, supported by increased marketing investment.
In its China label infant formula trade, there was growth of 9.5%, with record market share in China-label IMF channels, holding a 3.5% market value share in mother and baby stores and a 3.9% market value share in domestic online retail channels.
Chief Executive and Managing Director David Bortolussi said the company continued to execute well against its growth strategy, primarily focused on the China market.
“A major highlight for the year was the successful launch of our upgraded China label infant milk formula [IMF] product,” he said.
“After several years of Covid-19-related disruption and market decline, we are pleased that our English label IMF sales stabilised in the first half and grew 6.9% in the second half.”
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