AN international obsession with infant formula supplements has pushed the A2 Milk Company's half year after-tax profit up from $92,000 to a massive to $9.34 million and prompted the specialist milk processor to upgrade its full-year forecast.
The Australian-based, but trans-Tasman listed, milk processor recorded a $NZ10.1m profit for the six months to December 31, up from just $NZ100,000 for the same time last year.
Total revenue increased 86pc to $139.1m compared with the first half of 2014-15.
Sales of A2 Milk's Platinum infant formula jumped 340pc to $68.31m, driving much of the company's business surge in Australia, NZ and China.
"Following a period of development, A2 Platinum infant formula has become a significant contributor to growth and earnings in ANZ, and China, which we see continuing," said managing director Geoffrey Babidge.
Fresh milk sales in Australia also continued to rise, with revenue up 5pc.
The company was now tipping a total full-year revenue in the $309m to $323m range, including its expectations of about $8m in establishment costs for its new US marketplace and re-organised UK supply chain.
While China and other Asia business recorded significant growth in revenue from infant formula and positive operating earnings for the first time, Mr Babidge said the foundation ANZ business continued to outperform, enjoying substantial growth in revenue and operating earnings as a consequence of "exceptional growth" in infant formula sales.
"We also see positive prospects for growth of A2 Milk whole milk powder, launched late last financial year and we're pleased with the growing level of distribution for A2 Milk in California and the repositioning of our brand in the UK in the specialty milk segment," he said.
A2 reported cash on hand at the end of the half-year of $33.6m, reflecting positive cash inflows from last year's oversubscribed equity raising activities in NZ and Australia, partially offset by an investment in working capital to fund the significant growth in infant formula.
"We are forecasting a significantly improved operating cashflow for the second half," Mr Babidge said.
"The decision to gain admission to the Australian Securities Exchange (ASX) in March last year has achieved the key objective of broadening investor participation alongside the existing NZX main board listing."
Australian investors now totalled more than 22,000 (on February 16), holding about 64pc of shares on issue.
Meanwhile, A2 Milk has appointed NZ commercial lawyer Peter Hinton, a partner with law firm Simpson Grierson, as a new director to its board and is looking.
Andrew Marshall
National agribusiness writer for Fairfax Agricultural Media.
National agribusiness writer for Fairfax Agricultural Media.
