A2 Milk said its business was unaffected by the outbreak of coronavirus in China but that it is unclear what the impact would be over the second half.
The alternative milk company said its net profit jumped by 21.1 per cent to $184.9 million in the first half to December31, well ahead of market expectations.
Its earnings before interest, tax depreciation and amortisation (Ebitda) came to $263.2m, up 20.5 per cent, against market expectations of around $247m.
A2 Milk's total revenue lifted by 31.6 per cent to $806.7m, compared with its own guidance of $780 to $800m for the half.
Group infant nutrition revenue came to $659.2m, up 33.1 per cent and there was strong growth in China label infant nutrition, with sales doubling to $146.7m.
Chief executive Geoff Babidge said the situation in China - where the death toll continues to mount - was dynamic but that demand for a2 Milk's products remained strong.
"In January and February, revenue was above expectations," he told the Herald.
A2 Milk staffers in China were working hard to ensure that product was available in the online sales channels and working closely with its distribution partner, state-owned China State Farm.
"The nature of our product means that there is inherent demand - so it's not discretionary to that extent.
"So our main focus is in ensuring that our product is available for the various channels of distribution."
"Clearly, to date, that strategy has been working very well, hence the revenue is tracking in the right direction," he said.
Babidge stressed that it was difficult to assess whether there would be an impact from the outbreak - positive or negative - over the second half.
"The reality is that product is flowing, and products such as ours are getting priority for clearance at ports."
Babidge added that it was air freighting product into China, when needed.
On arrival in the PRC, product was gaining quick customs clearance.
"We are very satisfied that we are going as well as, if not better than, others in respect of managing logistics for product arriving in China."
Separately, dairy export giant Fonterra said there had been a slowdown in processing of containers at ports but that it was managing the flow of product into China carefully to avoid congestion.
A handful of big food companies, including the multinational Nestle, have delved into offering a1 beta-free infant formula that a2 Milk has specialised in, but Babidge said the competition had had "no significant impact" on its sales in China.
Market share in infant formula in China - as measured by Kantar - jumped to 6.6 per cent in December from 5.4 per cent a year earlier.
While China's falling birth rate was an issue "for the totality of the market" it was not having an impact on a2 Milk's growth trajectory, he said.
In the United States, which the company expects will provide the next leg of growth, revenue doubled and distribution expanded to 17,500 stores.
Babidge, an a2 Milk veteran, stepped back into the job when Jayne Hrdlicka left the company last year after a short stint.
He said he would remain in the job "for as long as the board would like" but that he expected a decision to be made on its likely successor in the second half of this year.
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With $618.4m sitting in the bank, a2 Milk - which has since its inception been solely a marketer of a1 beta free products - said it was looking at manufacturing in its own right, due to the increased scale of its infant nutrition business. As it stands, Synlait Milk, which is part owned by a2 Milk, is the company's main supplier.
For the full 2020 year ending in June, the company said it anticipated continued strong revenue growth across its key regions supported by increased marketing investment in China and in the US.
A2 Milk's gross margin increased to 57.2 per cent, reflecting a continued shift to infant formula.
A2 Milk's fresh milk business in Australia rose by 11.3 per cent to $74.7m, taking its market share to a record 11.3 per cent.
In the US, where a2 Milk is making a big push, revenue more than doubled to $28m. The company has a target of US$100m in annualised sales for the US.
The company's share price, which has a history of big moves up and down, rallied sharply on the back of the news.
By mid-afternoon, the stock was trading at $16.54, up 86c or 5.4 per cent.
Oyvinn Rimer, senior research analyst at Harbour Asset Management, said a2 Milk had exceeded market expectations across all the main metrics - sales, gross profit, Ebitda and net profit.
"This is a very strong vote of confidence in the state of the company," he said.
