A2 Milk shares jump 5pc after bullish start to financial year

Shares in a2 Milk have surged after it booked strong revenue and profit growth in the first four months of the financial year.

A2 milk. (AAP Image/Tracey Nearmy)

Shares in The a2 Milk Company have surged after the fresh milk and infant formula supplier said revenue and profit grew strongly in the first four months of the current financial year.

The New Zealand-based company on Tuesday said revenue for the four months to October 31 was up nearly 69 per cent at $NZ262.2 million ($236.7m), reflecting strong growth in nutritional products in Australia, New Zealand and China, as well as positive momentum in the US and UK.

The dual-listed dairy firm’s net profit for the same period more than doubled to $NZ52.3m.

The news drove a2’s ASX-listed shares (A2M) up 36 cents, or 5.09 per cent, to $7.43 at 12.35pm (AEDT).

A changing product mix and increases in raw material costs had put pressure on some product margins, but this had been more than offset by the weaker New Zealand dollar.

A2 Milk also said it has a strong platform from which to expand further into new markets and new nutritional categories.

“Based on this strong trajectory, the board continues to believe that there is significant potential for further growth in our priority markets in Australia, China, the United States and the United Kingdom,” a2 Milk chairman David Hearn told shareholders at the company’s annual general meeting in Auckland. The company said its a2 Milk fresh milk brand and a2 Platinum infant formula brand are performing well in Australia and New Zealand, and that a2 Platinum sales continues to grow in China.

The recent launch of Australian fresh milk into the Singapore market was also progressing well.

Mr Hearn said the a2 Milk board continues to monitor the appropriate use of available capital in the best long-term interests of all shareholders, and will update the market at the release of the company’s half-year results in February 2018.

AAP