A2 Milk lifts first half profit by 22pc, sales up in China

A2 Milk managing director and chief executive David Bortolussi. Photo / Supplied

A2 Milk lifted its first-half net profit by 22.1 per cent to $68.5m and said the outlook for 2023 was positive, with low double-digit revenue growth expected.

However, the company said the Chinese infant formula market would remain challenging.

The company expects its ebitda margin for the year to be similar to that of the 2022 financial year (13.6 per cent).

The net profit included amounts attributable to non-controlling interests.

A2 Milk’s earnings attributable to a2 Milk shareholders came to $73.8m.

There was double-digit growth in revenue (18.6 per cent) and earnings (10.5 per cent) at the ebitda level.

Sales of a2 Platinum infant formula in China were up 18.6 per cent against a 12.5 per cent decline across the entire China infant formula market.

A2 Milk chief executive and managing director David Bortolussi said the company had achieved record market shares in China label channels.

In terms of regulation, a2 Milk said its China label infant formula registration remains on track to be achieved in the second half of 2023 subject to China’s SAMR approval.

A2 Milk said its closing net cash position at the half was $707.2m.

“The company expects the increasingly challenging China infant formula market dynamics to continue due to fewer births in calendar 2022 and the rolling impact from fewer births in prior years on later stage infant formula products products,” Bortolussi said.

“It is also expected that the English label market will continue to be impacted by the evolving channel dynamics and a further shift towards the China label market,” he said.

The China infant formula market was also expected to experience a degree of disruption with the market transitioning from current to new “GB” registered product during calendar 2023, he said.

“Despite these challenges, the Company is continuing to deliver against its refreshed growth strategy, and is expecting low double-digit revenue growth in 2023 supported by growth in China label IMF, ANZ liquid milk and USA liquid milk sales,” Bortolussi said.