a2 Milk announced the appointment of new Chief Executive to take the realm of its Greater China segment for strengthening the company’s market position in dairy-based nutritional products across China.
In the announcement dated 25 March 2019, a2 Milk Company Limited (ASX: A2M) announced that Li Xiao has been appointed to the role of Chief Executive Greater China with effect from 29 April 2019.
Li Xiao brings in his expertise in building businesses of a diverse range of multinational and fast moving consumer goods’ companies including Nike, Mars, Burger King and Kids Entertainment Division at Wanda Group.
Commenting on the appointment of Li Xiao, Managing Director & Chief Executive Officer of a2M, Jayne Hrdlicka stated that Li Xiao will be great addition and strong fit to the company’s management and its unique culture as he brings in his long track record of outstanding results achieved by finding innovative pathways to building businesses across multiple consumer categories in China.
In the line of hierarchy, Mr Xiao is said to report the Chief Executive Asia Pacific Peter Nathan directly along with keeping the Group’ Managing Director & Chief Executive Officer Jayne Hrdlicka in a loop.
Li Xiao will sit in Shanghai at the executive level of a2M’s senior leadership team. He is entrusted with the responsibility of deriving the greatest possible benefits from the opportunities present across the Chinese market. Initially, Mr Xiao has reportedly been asked to focus on the company’s current well-developed strategy and preparing for future growth opportunities across Greater China.
The company recently reported 50.1% growth in its China and other Asia’s revenue to NZ$171.7 million for the first half of Fiscal 2019 compared to the previous corresponding period. The Group has achieved over 83% growth in its China label revenue through Mother Baby Stores (MBS) on the back of its unique multi-channel strategy.
In the first half of FY2019, a2M invested strongly in both external and internal capability to better understand the Chinese market, consumers, channel dynamics and methods of improving brand awareness.
Going forward, the company intends to reinvest the benefit of scale into increased marketing activities in the second half with the focus on advancing the company’s brand awareness in China and the United States.
a2M expects its revenue growth rate in 2HFY19 to be in line with 1HFY19 on the back of increased investment in marketing and brand building in 2HFY19, FY20 and beyond. However, the second half EBITDA margins are expected to dip slightly lower than the first half which could eventually result in the full year FY19 EBITDA margin to reach approximately 31-32% as a percentage of sales.
A2M stock price declined by 0.522% to close at $13.340 on 25 March 2019. The stock last traded at a price to earnings multiple of 41.680 x with a market capitalisation of $9.83 billion. Over the past 12 months, the stock has gone up by 2.68% including a massive momentum of +33.30% in the past three months.
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