Coronavirus fails to dent a2 Milk’s revenue, share price surges on ASX

The a2 Milk Company’s sales revenue are above expectations, prompting its share price to surge, despite the global coronavirus scare.

Shares in The a2 Milk Company have surged on the basis of strong half-year financial results.

SHARES in the a2 Milk Company have surged after the dairy company reported strong half-year financial results and unexpectedly good returns for the first two months of 2020.

The share price on the Australian Securities Exchange hit $16.41 this morning, the highest level in seven months and a big turnaround after three days of mayhem on sharemarkets around the world as the coronavirus scare takes hold.

Shares have now settled back to $16.22 after ending yesterday at $15.

The a2 Milk Company reported revenue had risen 32 per cent to $NZ806.7 million ($A774.6 million) for the six months to December 31 last year, compared to the previous corresponding period.

Net profit after tax was reported at $NZ184.9 million ($A177.5 million).

Putting that into perspective, the dairy company’s full-year revenue just 18 months earlier was $NZ922.7 million ($A886.2 million)

Coronavirus had little impact on trading in China for the first two months of this calendar year, although the company was unable to definitively assess the impact of the health scare.

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“Given the essential nature of our products for many Chinese families, demand is strong, particularly through online and reseller channels, with revenue for the first two months of the second half of 2020 above expectations,” the company said in a report.

“However, this is a dynamic situation and at this stage we are unable to quantify the impact, either positively or negatively, for the full year.

“Given the Covid-19 situation, we are assessing the level of discretionary marketing investment and trade marketing activation that can be effectively deployed in China for the remainder of the fiscal year.”

The company said sales revenue from its a2 Platinum infant nutrition products in China had doubled to $NZ146.7 million ($A140.9 million) during the first six months of 2019-20.

Sales of a2 liquid milk in the US had increased 116 per cent to $NZ28 million ($A26.8 million).