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A2 Milk Company Ltd (ASX:A2M) Profit Up 64% So Far In F19

A2 Milk Company Ltd (ASX:A2M) has reported that its profit is up 64% so far in FY19 at its annual general meeting (AGM).

A2 Milk Company Ltd (ASX: A2M) has reported that its profit is up 64% so far in FY19 at its annual general meeting (AGM).

A2 Milk sells a2 milk, infant formula and other dairy products in Australia, New Zealand, China, the United States and the United Kingdom.

A2 Milk’s profit update

For the first few months of F19 A2 Milk said it generated NZ$368.4 million of revenue, which is growth of 40.5% compared to the previous year.

EBITDA was up by 58.5% to NZ$124.2 million (click here to learn what EBITDA means). However, management forewarned that the EBITDA margin of 33.7% was better than expected due to timing and the FY19 margin is likely to be similar to FY18’s margin.

Profit before tax was NZ$124.9 million, which was 60% higher and net profit after tax came in at NZ$86 million, 64.5% higher than last year.

Management also broke down progress in its key regions:

Australia

The company has now grown its fresh milk business to a record market share of 10%.

A2 Platinum infant formula remains the market leader with the market share increasing to 33% from 32% at the end of FY18. Newly introduced products “continue to grow and gain momentum“.

China

The company has been working on its multi-channel strategy with the daigou network and cross-border e-commerce platforms. It is now distributing to another 2,000 stores.

Chinese label infant formula sales have grown 75% compared to the same four month last year.

United States

A2 products are now being sold in an additional 3,000 stores since the end of FY18, bringing the total to around 9,000 stores.

The company said the US market was promising, “Recent USA research data looks a lot like our experience with fresh milk in Australia.”

Other developments

A2 Milk made an additional investment in Synlait Milk Ltd (ASX: SM1) to bring its holding up to 17.4% to reinforce its supply agreement. The first Fonterra (ASX: FSF) initiative was also successfully launched.

The company also said that its partnership with China State Farm continues to strengthen.

Outlook

Management believe strong revenue growth will continue but at a slightly more moderate rate.

A2 also thinks that the regulatory outlook with regards to China. The company has the required registrations for infant formula. Management also believe it can meet the important new e-commerce laws.

The share price of A2 Milk is almost flat over the past six months according to Google Finance.

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