A2 Milk announces dividend policy, timing of first payout

The group has set a payout policy and date for its maiden dividend, with business tracking better than planned for the year so far.

A2 Milk’s year to date trading is ahead of plan and previous guidance provided in August. Picture: Zoe Phillips

ASX-listed New Zealand dairy group A2 Milk will reward shareholders with their first dividends in February next year, with business for the 2025 financial year so far “ahead of plan” and leading to a slight upgrade in guidance.

The news set up for a positive annual shareholder meeting in New Zealand on Friday.

Its ASX-listed shares jumped 13.7 per cent to $5.47 in early trade, after Auckland-listed shares rose as much as 25 per cent earlier in the day.

The company is now expecting mid to high single-digit revenue growth in the 2025 financial year, compared to previous guidance of mid single-digit growth.

However earnings (EBITDA) margin (as per cent of revenue) is still expected to be broadly in line with fiscal 2024, with the first half down and second half up compared with prior year.

Year to date trading is ahead of plan and previous guidance provided in August, primarily due to a significant increase in its dairy nutrition business Mataura Valley Milk (MVM) external ingredient sales compared to plan and prior year due to higher global prices, currency impacts and changes in product mix.

In addition, English Label infant milk formula (IMF) sales and Liquid Milk sales are slightly ahead of plan.

The dividend policy targets a payout ratio range of between 60 per cent and 80 per cent of net profit after tax excluding non-recurring and other items (normalised NPAT).

Chair Pip Greenwood said considerable progress has been made in developing A2M’s operating model and creating a more resilient business. “Given this progress and our strong balance sheet position, the board believes the time is right to introduce a dividend policy that delivers sustainable cash returns to shareholders over time.”

Chief executive David Bortolussi said the group is pleased to “reward our shareholders for their support over many years and to reflect the significant progress made since we announced our refreshed growth strategy in 2021”.