This article was originally published on RNZ and re-published with permission.

Specialty dairy company A2 Milk has stormed to a record profit on the back of surging demand for its infant formula.

The company’s net profit for the year ended June has risen by nearly half to $287.7 million, compared with the previous year’s $195.7m.

Its revenue rose by 41 percent to $1.3 billion driven by strong demand in Australia and China, growth in new markets such as the United States, and new products such as fresh milk.

The company, which has been one of the hottest local stocks over the past year, said it was pressing on with diversifying its business.

“This year we focused on playing to our strengths and sharpening our strategic thinking,” managing director Jayne Hrdlicka said.

The company produces only milk without the A1 protein, which is seen as more acceptable for those unable to handle ordinary milk.

Canterbury based Synlait Dairy produces the infant formula for A2 Milk, which also sells domestic fresh milk in conjunction with Fonterra.

The company significantly increased its marketing – up 84 percent to $135m, while its margins also increased.

Hrdlicka said the priorities for the coming year would be to get the most out of its existing products and markets, broaden its product range, and look for new markets. It has been doing preliminary work in Asia.

“We anticipate continued growth in revenue across our key regions supported by increasing brand and marketing investment in China and the US.”

A2 Milk is debt free and cash rich, but has never paid a dividend. Its share price has risen more than 54 percent in the past year, making it the most valuable stock on the New Zealand exchange.

Leave a comment