The A2 Milk Co. has lifted its forecast for full-year revenue growth into double-digit territory supported by rising infant-formula sales in China.
The New Zealand-headquartered dairy group now expects to deliver sales growth of low-to-mid double digits, compared to the mid-to-high single digits presented in the back half of 2024.
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A2 Milk, which is listed in New Zealand and Australia, also announced today (17 February) that it will pay a dividend to shareholders for the first time. The company’s shares closed the day 19.5% higher at NZ$7.86, taking gains so far this year to 24%.
First-half group sales for fiscal 2025 rose 10.1% to NZ$893.8m ($512.5m), with the China and the rest of Asia segment delivering 11.8% growth. Sales in the US rose 13.2% and those for the Mataura Valley Milk business climbed 31.9%. However, Australia and New Zealand saw a 2.7% decline.
Managing director and CEO David Bortolussi said: “Execution of our growth strategy has resulted in another period of strong operational and financial performance.
“We are pleased to declare our first-ever dividend, recognising the substantial progress we have made as a business and rewarding our shareholders for their continued support.”
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By GlobalDataHe added: “In our infant-milk formula business in China, we are a top-five player and one of the best-performing brands, growing sales by 7% in a market that declined 6%.
“Our liquid-milk business continues to perform well in ANZ and the US with market share gains driven by growth in our core portfolio and innovation in both markets.”
A2 Milk’s group EBITDA climbed 5% to NZ$118.9m but the margin fell 60 basis points to 13.3% due to what the company called “temporary supply constraints” affecting parts of its China infant-formula business.
Net profit after tax increased 7.6% to NZ$91.7m.
A2 Milk did register overall growth in the China infant-formula sector, which has been a challenging market for manufacturers given declining birth rates.
The company explained today: “There was some improvement in the total China IMF market in 1H25 with the rate of value decline improving to -6.1% with the number of newborns increasing 5.8% to 9.54 million during CY24, the first year of growth since 2016.
“Whilst this increase was expected due to a catch-up in Covid-related postponed pregnancies and 2024 being the Year of the Dragon (which has historically been a year with higher relative births), a longer-term modest decline is expected due to socio-demographic trends.”
Within infant-milk formula, A2 Milk said English label sales rose 13%, supported by the China Cross-Border E-Commerce (CBEC) and O2O (offline-to-online) channels. China label sales were up 2%.
In A2 Milk’s liquid milk segment, group sales increased 12.1%, with Australia and New Zealand posting 11.2% growth and the US 13.4%. Powdered milk products climbed 17.3%.
China and other Asian countries generate the majority of A2 Milk’s sales revenue. The region delivered NZ$614.2m in the first half, compared to NZ$157.7m in Australia and New Zealand, and NZ$64.5m in the US.
