A2 Corp doubles profit as sales soar in Australia

Geoff Babidge. Photo / Supplied
Geoff Babidge. Photo / Supplied

A2 Corp, which claims a health benefit from the protein variant in its milk, more than doubled annual profit by expanding in Australia and is looking at building its footprint in China and Britain for its next stage of growth.

Net profit climbed to $4.4 million, or 0.74c a share, in the 12 months ended June 30, from $2.1 million, or 0.4c, a year earlier, the company said.

Revenue jumped 44 per cent to $64 million, with Australian sales accounting for about 98 per cent. A2 increased its market share to 5.8 per cent by value of fresh milk sales.

"The first two months [of trading] continue to be positive in respect of sales and we'll look for more market share growth to come," managing director Geoff Babidge said.

"It will be interesting to see whether the momentum we've have in the past can be maintained - obviously it's been an extremely strong rate of sales growth and we're optimistic it can continue."

Last week, A2 opened a new production facility in Sydney to cope with growing Australian demand as it prepares to launch New Zealand-produced infant formula into China and expand into Britain through a joint venture with Robert Wiseman Dairies.

The British "trading environment is challenging, but we have a unique offering", Babidge said.

A2 expects its first production of infant formula, supplied by Synlait Milk, in December, and Babidge said talks with a partner in the Chinese market were well advanced.

"It's a very big market, particularly for New Zealand-sourced infant formula."

Babidge said the strategic review of the business would be considering A2's domicile after shareholders last year agreed to a new constitution that allows for the NZAX-listed stock to be transferred to the New Zealand stock exchange's main board or to the ASX.

The shares rose 2.2 per cent to 47c and have surged 100 per cent this year.

The review is still underway, and Babidge said A2 would update the market when it was completed.

The board did not declare a dividend.

- BusinessDesk

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