A2 Milk, top-performing stock on NZX 50 in 2017, cites 'pleasing' start of 2018 financial year

Monday 13th November 2017

A2 Milk, the best performing stock on the benchmark S&P/NZX 50 Index this year after its annual profit tripled, signalled that growth has continued into the current financial year.

The company, which markets milk with a protein variant said to have health benefits, outlined positive developments in its Australia and New Zealand, China and other Asia, US and UK markets in presentation notes for delivery at a UBS Investor Conference in Sydney today, although it stopped short of providing detailed figures noting it would give an update at its annual meeting of shareholders on Nov. 21. Its shares rose 3.1 percent to $7.64 and have soared 248 percent this year.

In Australia and New Zealand, its largest geographic market, a2 said fresh milk is "performing well", with "pleasing" growth in the first four months of the 2018 financial year, compared with the same period a year earlier. It noted a2 Platinum infant formula continues to be a "significant contributor", and there had been "strong consumer take up" from its successful launch of a2 Platinum Stage 4 product, and "strong growth" in its a2 Milk branded skin and whole milk powders.

The company noted that a pending court hearing in the Australian Federal Court had been vacated from this month until the New Year with a date to be determined. A2 faces a legal challenge in Australia from rival Lion Group over the science behind health-related claims about the milk. A2 had taken Lion to court over its milk brand's use of A2 protein claims, seeking an injunction and damages.

In a2's 'China and other Asia' market, the company said it is building a local team to support ongoing sales growth, and it remains focused on distribution expansion through mother-baby stores. The company noted its market share for its a2 Platinum infant formula brand continues to strengthen with Kantar Infant Formula market tracking for the quarter ending Sept. 8 showing a market share lift to 4.1 percent from 3.5 percent in the quarter ended June 30.

A2 said its recent launch of Australian fresh milk into Singapore, its first South East Asia initiative, was "progressing well", and noted it had achieved China Food and Drug Administration registration for its China label infant formula.

In the US, the company said it's continuing to build distribution in core regions and was building sales following advertising and media campaigns. It said it was investigating new product opportunities for the market.

In the UK, a2 said it was making "pleasing progress" in the rate of sale for fresh milk, and achieving "continued growth" in its distribution footprint. A2 Platinum infant formula sales in the wholesale channel were in line with the previous corresponding quarter, and the company said it's continuing to assess incremental opportunities in Europe and the Middle East.

(BusinessDesk)

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