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A2 Milk forecasts FY revenue of $900M-$920M, says 2H margins held at 1H levels

Wednesday 16th May 2018

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A2 Milk Co forecast a surge in full-year sales and said its gross margin in the second half has stayed in line with its first half, as expected.

Revenue in the 12 months ending June 30 is expected to be $900 million-to-$920 million, up from about $550 million last year, when the Auckland-based company reported that profit tripled.

In the past 12 months, A2 Milk shares have soared 280 percent, the best performance on the S&P/NZX 50 Index, which has gained 17 percent in that time. The stock may extend its gains after news that it will be added to MSCI's main global index.

A2 said group revenue in the nine months ended March 31 rose 70 percent to $660 million, which it said "reflects continued sales growth in both nutritional products and liquid milk. It also includes the impact of seasonal sales from key China selling events weighted towards 1H18."

Its gross margin for the full year "is expected to remain broadly consistent with 1H18, given the benefit of throughput efficiencies and currency movements," the company said. Gross margin was 49.8 percent in the first half, which the company said at the time was higher than expected "primarily due to the higher proportion of infant formula sales, currency movements and favourable net selling prices relative to plan."

Marketing investment spending in the year is expected to be in a range of $82 million-to-$87 million, reflecting increased spending in the US and China.

(BusinessDesk)

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