The A2 Milk Company Ltd – Witnesses surge with outstanding financial performance in FY18

Outstanding financial performance in FY 18: The A2 Milk Company Ltd.’s (ASX: A2M) stock surged 5.5% on August 22, 2018 after the company delivered outstanding financial performance in FY 18 with 116% growth in net profit after tax to NZ$195.7 million.

During FY 18, the company reported 68% rise in the total revenue to NZ$922.7 million and EBITDA grew 101% to NZ$283.0 million. The company also posted for 2018 strong expansion of EBITDA to sales margin of 31%, up from 26% in the pcp. The company’s cash on hand at the end of the year 2018 was also up over pcp.

Moreover, in 2018 the company has achieved significant progress in Australia, China and the USA and important emerging market opportunities have started to materialize. Additionally, for FY 19, A2M expects further growth in revenue particularly in respect of nutritional products in ANZ and China, and liquid milk in the United States.

However, during FY 19, the Marketing expenditure as a percentage of sales is expected to be higher than FY18 due to the continued investment in the Australian market, re-phasing of 2H18 activities in China, and appropriate investment to support US market expansion. Overhead costs in 2019 are also expected to be higher than FY18, on the back of increasing headcount for China and the Corporate office to support continued growth and organisational development.

Overall for 2019, A2M expects the EBITDA to sales ratio for FY19 to be broadly consistent with that achieved for FY18. The stock has otherwise slumped 10.7% in past six months.

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