A2 Milk is expected to report its annual result later this month. Photo / 123RF
A2 Milk is expected to report its annual result later this month. Photo / 123RF
Infant formula marketer a2 Milk said its application to the US Food and Drug Administration (FDA) for approval to sell infant formula to the US was under "active review" but that there was no certainty around timing.
The company's shares rallied by 43 cents or 8.6 per cent to $5.42today on the back of speculation in the Australian Financial Review (AFR) that approval was imminent.
The stock went into a trading halt before a2 Milk released a short statement to the NZX and the ASX.
In it, a2 milk noted that the AFR had suggested the company was nearing approval from the FDA and that such approval could be received as soon as this week.
"The company wishes to confirm that while we have been informed by the FDA that our application is under active review, at this stage there is no certainty as to the outcome of the application or the timing of any approval," a2 Milk said.
ASX-listed Bubs, one of a2 Milk's Australian peers, has been air freighting product to the formula-strapped US market for several weeks.
A2 Milk's main infant formula market is China, and analysts have debated whether the ability to send some stock to the US would be a help or a hindrance for the former high flier, whose profitability has come under pressure in recent years.
"It might be helpful in terms of them using up some of their inventory that they have built up," Harbour Asset Management portfolio manager Shane Solly said.
"You hope that it (US sales) becomes a long-term thing but in and of itself, this is a short term contract and it doesn't look long term," he said.
"If it's short term, it doesn't really move the dial," he said.
With China being a2 Milk's main market for formula, there was earnings risk associated with the company due to economic headwinds in the PRC, he added.
A2 Milk's result for the June year is expected on August 30.
