A2 Milk posts profit jump following China sales success

A2 Milk has been making inroads in China for years and the latest move by Beijing has given the company another boost.

Speciality milk producer A2 Milk has posted a 22 per cent gain in net profit for the first half of the 2022-23 financial year.

The Auckland-based dairy brand’s first half profit pushed past $62 million ($NZ68.5 million) on the back of its growing share of the Chinese baby formula market.

Formula sales gained 18 per cent overall while liquid milk sales across Australia and New Zealand rose 5.6 per cent.

Its American liquid milk sales jumped by 62 per cent during the same period, with the company making significant inroads in the United States last year.

A2 Milk’s profile rose in the United States, along with Bubs Australia, when a major domestic producer of infant formula was forced to shut in February 2022.

The Biden administration relaxed America’s formula import policy to mitigate nationwide shortages three months later.

Kevin Bush is the executive general manager of Australia and New Zealand for A2 Milk, pictured at Gilberts Cafe in Kew. Picture: Aaron Francis

Last week, A2 Milk shares jumped more than six per cent after indications the company was close to gaining approval from Chinese authorities to sell infant formula under Beijing’s new national standards.

A2 Milk managing director David Bortolussi said the company was pleased with the latest figures given “significant market headwinds and coronavirus-related challenges”.

“As the China market continues to evolve, we are focused on refining our English label distribution model, which resulted in a modest increase in sales,” he said.

“We are in good shape heading into an increasingly challenging period with the rolling impact of the decline in the birth rate and a market-wide transition of China label product.”

Unlike rival Bubs Australia, which announced last year it would produce infant formula in China, A2 Milk processes all of its infant formula in New Zealand at Synlait.