Dairy and infant formula business a2 Milk Company Ltd (ASX: A2M) released a trading update to the ASX this morning ahead of a Hong Kong shareholder and investor presentation.
In its public filing, a2 Milk Company confirmed its revenue for the nine months to 31 March 2018 was NZ$660 million, up around 70% on the prior corresponding period. a2 Milk Company said the improved sales result reflected growth in both nutritional products and milk.
Many competitors in the infant formula industry, including Blackmores Limited (ASX: BKL) and Bellamy’s Australia Ltd (ASX: BAL), are hoping to cash in on the surge in demand for quality dairy products from Asia’s middle class. a2 Milk Company said the nine-month revenue result was bolstered by seasonal sales from “key China selling events weighted towards 1H2018”.
Looking towards the future a2 Milk Company expects to report revenue of between NZ$900 million and NZ$920 million for the year to 30 June 2018. Its gross margin is expected to be broadly in-line with the first half with benefits flowing from throughput efficiencies and currency movements.
In a bid to capitalise on the demand in China and the US a2 Milk Company will spend between NZ$82 million and NZ$87 million.
In March, it was revealed that food giant Nestle would launch its own brand of a2 dairy products. a2-only milk products are thought to be healthier than regular milk products, which contain both a1 and a2 proteins.
Over the past 12 months, shares of a2 Milk Company have moo-ved more than 200% higher, according to Google Finance data.
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