Feb 19th, 2024 - Shares of $The a2 Milk Co Ltd (A2M.AU)$ rised 15.84% to A$5.85 after announcing its half-year results of fiscal year 2024, which ended at 31 December 2023.

2024 Half-year Results Highlights

• Total revenue growth of 3.7% to NZ$812.1 million

  - Regional revenue: China & Other Asia segment up 16.5%, ANZ down 24.1% due to a change in distribution strategy, USA up 8.6% and MVM down 4.7%

  - Category revenue: Total IMF up 1.5% with China label up 10.4% and English label down 6.9%, liquid milk in ANZ and USA up 1.5% and 7.0% respectively, other nutritionals up 48.5% and ingredients (MVM) down 4.7%

• Non-GAAP EBITDA growth of 5.0% to NZ$113.2 million with an EBITDA margin of 13.9% (up 0.2ppts)

• Net profit after tax (NPAT) attributable to owners of the Company up 15.6% to NZ$85.3 million

• Basic earnings per share (EPS) up 18.6% to NZ11.8 cents

• Closing net cash of NZ$792.1 million up $34.9 million on June 2023 with operational cash conversion of 86.8%

The a2 Milk Company's Managing Director and CEO, David Bortolussi said:

We continued to execute against our growth strategy, primarily focused on the China market which now represents approximately 80% of our total branded sales. We grew our IMF sales in a market that was down double-digits with China label sales up significantly, and launched our new GB registered China label IMF product which is progressing well.

After several years of COVID-19 related disruption and market decline, we are pleased that our a2 Platinum® sales and the English label market have stabilised compared to 2H23.

Beyond IMF, we are investing in growth in other nutritional products for kids, adults and seniors, and we are also pursuing growth in new markets.

As we continue to invest and grow, consumers are increasingly seeing the benefits of a2 Milk, providing us with a platform to further expand our portfolio, with the launch of more new products expected later this year.

Outlook

Revenue growth guidance for FY24 has improved from the prior outlook statement. For FY24, the Company is now expecting the following relative to FY23:

• Revenue growth of low to mid single-digit percent

• IMF, other nutritional product and USA sales up (USA IMF immaterial), ANZ liquid milk sales flat and MVM sales down

• Gross margin (% of revenue),  Marketing expenses (% of revenue) to be similar

• Administrative & Other expenses (% of revenue) to be similar to down

• EBITDA margin (% of revenue) to be broadly in line

• Operational cash conversion to be up

• Capital expenditure to increase to ~$30 million

• Improved revenue growth guidance for FY24 relative to prior outlook statement

About Company

A2 Milk is a New Zealand licensor and marketer of fresh milk, infant formula, and other dairy products that lack the A1 beta-casein protein. The firm was founded in 2000 by Corran McLachlan, who developed a genetic test to determine which proteins a cow produces in its milk, and business partner Howard Paterson. The company has been through a tumultuous history of receivership, legal battles, and strategic shifts, but emerged in its current structure in 2006 and listed publicly in March 2013.