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New Zealand A2 Milk Company Reports 290% in Profit
February 15, 2017

New Zealand’s A2 Milk Company Ltd reported on Wednesday that its half-year profit rose 290 percent as baby formula sales in China jumped.

The milk and baby formula maker posted net profit after tax for the six months to Dec. 31 of NZ$39.4 million ($28.21 million), compared with NZ$10.1 million in the same period the previous year.

A2, which produces milk free from a protein that it says causes gut problems in some milk drinkers, has recently expanded in major U.S. supermarkets and has focused heavily on the Chinese market, where revenues increased by 348 percent to NZ$37.7 million.

“The outstanding aspect of our half-year performance was the continuing growth in a2 Platinum infant formula, through a multi-channel strategy involving a combination of local distribution, e-commerce, and overseas shopping (‘Daigou’) traders,” Managing Director Geoffrey Babidge said in a statement, of the company’s initiatives in China.

“Daigou” is a channel of commerce in which personal shoppers in Australia and New Zealand buy goods on behalf of customers in China.

A2’s results contrast with rival Australian milk company Bellamy’s, which cut its revenue forecast in January, saying new import rules in China would prompt exporters to dump stock, leading to a glut and hurting its shipments.

A2 expects infant formula profits in the next six months to be lower relative to the first half, because the major Chinese sales events are mostly in the first half and because of increased marketing costs.

The board plans to adopt a dividend policy after the end of full-year 2017, the company said. ($1 = 1.3965 New Zealand dollars)

Source – Dairy Herd



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