A2 Milk net profit up 42pc, to return $150m through share buyback

A2 Milk chief executive David Bortolussi. Photo / Supplied

A2 Milk's share price rallied sharply after the company reported a 42 per cent jump in annual net profit to $114.7 million, which was driven by strong growth in its infant formula business in China.

The company also said it intended to return capital through a $150m on-market share buyback.

By mid-morning, a2 Milk's shares were up 34 cents or 6.2 per cent at $5.81.

The company's result showed revenue in the June year grew 19.8 per cent to $1.44 billion.

Earnings before interest, tax, depreciation and amortisation (ebitda) was up 59.0 per cent to $196.2m.

Cash on hand came to $816.5m.

A2 said it faced a positive outlook for 2023 with high single-digit revenue growth and ebitda margin improvement expected.

Chief executive David Bortolussi said it was a successful year, with the company returning to double-digit growth in revenue and earnings despite significant headwinds.

"We are pleased with the progress that has been made in stabilising the business, refreshing our strategy and improving our execution," he said.

"Our significant increase in marketing investment has driven further gains in brand health metrics and record market shares delivering strong growth in our China infant milk formula business," he said.

China label and English label infant formula sales were up 12.2 per cent and 11.6 per cent, respectively.

Australia-New Zealand, and US liquid milk sales were up 1.8 per cent and 30.2 per cent, respectively.

"Our significant increase in marketing investment has driven further gains in brand health metrics and record market shares delivering strong growth in our China infant milk formula business," Bortolussi said.

The company remained committed to the unofficial daigou channel and had increased its direct engagement and marketing support, he said.

Jarden senior analyst Adrian Allbon said a2 Milk had shown strong "execution" of its strategy in a difficult macro environment.