A2 Milk's shares last traded at $6.02, up 40c or 7 per cent from Friday's close, the stock having dropped by about 50 per cent in value over the last 12 months.
"Market conditions continued to be challenging with the China infant formula market declining by 3.3 per cent in value during the year due mainly to the cumulative impact of a lower birth rate, while the Australian and US (premium) liquid milk markets were in growth," chief executive David Bortolussi said in a statement.
Covid-19 and other external factors continued to affect the company's supply chain.
Bortolussi said the interim results were in line with the company's expectations and that a2 Milk expected to deliver revenue growth in the full year.
Revenue was marginally lower than that the previous first half but was in line with guidance, down 2.5 per cent to $660.5m, but up 24.8 per cent on the second half of 2021.
The market consensus for today's result was for a net profit of $50 million for the six months to December, down from $120m in the previous corresponding period.
A2 Milk said its revenue outlook for the second half had improved.
"It is still expected to be significantly higher than the second half of 2021, and with growth now expected on first half 2022 and for full year 2022 ahead of initial expectations due mainly to growth in China label and English label infant formula," Bortolussi said.
"However, this revenue improvement is not expected to translate into higher earnings as the company significantly increases brand and other reinvestment consistent with its growth strategy."
A2 Milk's English-label infant formula is product that is likely to have landed in China through the unofficial daigou trade channel - typically through Chinese students returning home - or through cross-border e-commerce channels.
China-label product is formula that has arrived in the People's Republic via conventional export-import means, for sale on the mainland in the so called mother and baby stores or online.
In October 2021, the company announced big cuts in its inventory and a refreshed growth strategy aimed at addressing the rapidly changing infant milk formula market dynamics in China.
Actions taken by the company in the fourth quarter of 20-21 and in the first quarter of 2022 to address excess inventory were also proving effective.
The measures had reduced inventory levels and had made for better pricing for participants in the a2 Milk business system.
Market conditions continued to be challenging with the China IMF market declining by 3.3 per cent in value during the first half due mainly to the cumulative impact of a lower birth rate, while the Australian and US (premium) liquid milk markets grew.
The Mataura Valley Milk acquisition and strategic partnership with China Animal Husbandry Group was completed in July 2021 and fully consolidated into the results.
The company had started planning for a laboratory and blending and canning capability at the Southland plant.
