A2 Milk boosted by performance in China as profit increases 47%

The A2 Milk Company reported a 41.4% rise in revenue compared to the previous year as the company benefitted from strong results in China.

In the 12 months ended 30 June 2019, revenue was NZD 1.3 billion ($830.2 million). The company said its results were underpinned by growing brand awareness, expanding product distribution and strengthening in-market execution in Greater China and the US.

Net profit after tax was up 47% on the year before at NZD 287.7 million ($183.7 million).

During the year, A2 extended a collaboration with China State Farm Holding Shanghai to sell powdered infant formula in China. The company saw revenues rise in its China segment by 73.6%.

US segment business revenues were up 160.7%, meaning the firm has grown revenue by over 100% during each of the last three years in the country, thanks in part to efforts to raise brand awareness as well as increased distribution.

In February, the company signed expanded sales agreements with Kroger and Albertsons/Safeway, completing its goal of achieving national distribution in the US.

Revenue from Australia and New Zealand was up 28.3% to NZD 842.7 million ($537.9 million).

However, the company has revealed that it will exit its UK liquid milk operations as the UK opportunity is “not of sufficient scale when compared to the significant growth potential in Greater China and the US”. A2 stressed that the decision does not preclude it from pursuing UK or European markets at some stage in the future for liquid milk or other nutritional products.

Going forward, the company said it views its core markets – Australia, New Zealand, Greater China and the US – as its most significant growth opportunities in the medium term.

It predicts growth will come both from its existing product ranges and innovation within these markets.