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A2 Milk says nine-month revenue up 42%, reiterates guidance

Wednesday 1st May 2019

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A2 Milk Co said group revenue accelerated a little in its third quarter, with sales for the nine months through March 31 being up 42 percent.

However, it said second-half sales should be broadly in line with the first as it pumps money into marketing and building organisational capacity.   

Group revenue was $938 million, reflecting continued sales growth in nutritional products and liquid milk, it said in an investor presentation published on the NZX. 

In New Zealand and Australia, its market share for A2 branded fresh milk was around 11 percent as of March 24, up from 10.8 percent in December, according to rolling 12-month data from the Aztec Australian Grocery Weighted Scan. Its A2 Platinum infant formula value market share lifted to 36.8 percent from 35.7 percent in the same period. 

A2 Milk said the Kantar market tracking of large Chinese cities showed its infant formula consumption value share increased to 6.0 percent as of March, up from 5.4 percent in December. 

Distribution in the US lifted from 12,400 stores in January to 12,700 stores in March. 

While A2 Milk is expecting second-half group revenue growth to be broadly in line with the first, it reiterated its second-half earnings before interest, tax, depreciation and amortisation margins will be lower.

Full-year ebitda as a percentage of sales will be 31 to 32 percent due to marketing investment, investment in organisational capability and the weaker Australian dollar versus the kiwi dollar.

Revenue lifted 41 percent on the year in the first-half to $613.1 million while ebitda was up 53 percent at $218.4 million.

It also reiterated that it doesn't anticipate any significant impact to gross margin percentage during FY19 as a result as rising dairy prices but "these increases are likely to have some impact to gross margin percentage in FY20," it said.

The stock last traded at $16.77 and has lifted 50.4 percent so far this year. 

(BusinessDesk)



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