The a2 Milk Company traded at lower levels on the day of its Annual General Meeting. A2M’s share price fell by 1.224% or $0.120 to close at $9.680 on 20 November 2018.
Under the leadership of new Chief executive officer Jayne Hrdlicka, the a2 Milk’s revenue jumped 40.5% to NZ$368.4 million in the first four months of Fiscal 2019, compared to the previous corresponding period. This reflects the strong infant formula sales experienced by the company across all its stages and channels.
As per the company’s information, China MBS distribution increased from approximately 10,000 to approximately 12,000 stores while US distribution increased from 6,000 to approximately 9000 stores.
Earnings before interest, tax, depreciation and amortization (EBITDA) grew by 58.5% to NZ$124.2 million for the four months to October 2018. It led unaudited net profit after tax (NPAT) of the company to increase from NZ$52.3 million in 4M FY18 to NZ$86.0 million in 4M FY19, outlining 64.5% improvement on the previous corresponding period.
The A2 Milk’s financial results for FY18 delivered strong results with Group Revenue of $922.7 million , a 68% increase over prior year; EBITDA of $283.0 million, double the fiscal year 2017; Net Profit after tax of $195.7 million up 116% on the previous corresponding period; strong cash conversion with operating cash flow of $231.1 million, an increase of 131%; and, importantly, record market share positions across all key products in all regions.
Further, the company has witnessed continued momentum in its China business that led China label infant formula sales to grow by over 75% on the same four months last year. Moreover, it has been reported that China MAT value share increased to 5.6% in Kantar consumption, compared to 5.1% as at FY18 end.
CEO Ms. Hrdlicka stated a2 Platinum® infant formula, which has been ranked number two brand in CBEC infant formula, remains the market leader with ~33% share up from ~32% share at the end of FY18.
On FY19 outlook, the company expects strong revenue growth to continue but at a slightly more moderate rate than in the first four months of Fiscal 2019. EBITDA to sales ratio is expected to broadly consistent with FY18 reflecting a higher gross margin percentage. But it is forecasted to be offset by Increased marketing expenditure as a percentage of sales given continued investment in the Australian market and an increased investment to support China and US market expansion – phasing will be higher in 2H19; further investment in greater resourcing to support continued growth; and the favourable impact of forex in the first four month forecasted to reverse during the balance of the year.
The a2 Milk Company Limited (ASX: a2M) is recognized as multinational company that operates its business across New Zealand, Australia, China, the USA and the UK. a2M stock last traded at $9.680 with market capitalization of $7.19 billion as on 20 November 2018. Moreover, the stock has witnessed a performance change of attractive 38.61% over the past one year.
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