Saturday, April 13, 2024

A2 Milk makes the best of fewer Chinese newborns

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Double-digit decline in market, but company stabilises sales of infant formula.
A2 remains a big component of this year’s primary index fall, its share price being down 45% since the start of the year.
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The share price of a2 Milk rose about 16% after the dairy company reported a 15% increase in first-half net profit to $85.3 million.

Revenue was up 3.7% to $812m and earnings before interest, tax, depreciation and amortisation were up 5% to $113m.

The company said it had stabilised its sales of infant formula (IMF) in China despite double-digit decline in the market overall.

The guidance for revenue growth in the full financial year has improved relative to the prior outlook statement.

The number of children born in China in 2023 improved somewhat compared with 2022, with a positive outlook for 2024 followed by an uncertain future.

The annual declines were minus 18%, minus 12% and minus 10% in 2020, 2021 and 2022 respectively whereas the decline in 2023 was 6%.

The total China IMF market declined 10.7% in volume and 13.6% in value during the first half of FY2024.

Twelve months back the a2 Milk (ATM) share price was around $7 and it fell to nearly $4 over the Christmas-New Year holiday period. It rose again to $6.25 following the interim results announcement.

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