A2 Milk 2024 results produce dividend for shareholders

After more than two decades on the dairy scene, a2 Milk is delivering a dividend to shareholders for the first time.

Bolstered infant and liquid milk sales have led a2 Milk to pay shareholders a first-ever dividend, more than two decades after the company was established.

The Australian Securities Exchange-listed milk company announced on Friday it would provide shareholders with their first dividends in February, given this financial year’s trading was “ahead of plan.”

Shares on the New Zealand Securities Exchange rocketed by 25 per cent on the news initially, but have eased back somewhat as trade progressed.

A2 had $969 million in cash at the end of the 2023-24 financial year but had never paid a dividend until this week’s decision.

Management said subsequent dividends were expected to be declared on a semi-annual basis in February and August each year at a level consistent with A2’s target payout ratio range.

a2 Milk chairwoman Pip Greenwood told shareholders at Friday’s annual meeting that the company was exploring opportunities to access additional Chinese label registrations.

She said the company was also developing its own nutritional manufacturing capability.

“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,” Ms Greenwood said.

The robust A2 result comes in the same week as the latest session of the Global Dairy Trade index lifted by 1.9 per cent, to sit at $US4089 ($A6266) a tonne.

It represents the second consecutive rise in the GDT with a 4.8 per cent boost a fortnight ago setting Australian farmgate step-up expectations in motion.

A2 chief executive David Bortolussi said the time was now right to start paying dividends with improved market conditions both at home and abroad.

“(We’re 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,” Mr Bortolussi said.