In addition, English-label infant formula sales and liquid milk sales were slightly ahead of plan.
The company said it now expected mid to high single-digit revenue growth in the current 2025 financial year compared with 2024, rather than its previous guidance of mid single-digit growth.
Earnings before interest, tax, depreciation and amortisation (Ebitda) margin, as a percentage of revenue, in 2025 were still expected to be broadly in line with FY24, with the first half down and and second half up compared with the previous year.
A2 Milk said its dividend policy targeted a payout ratio range of between 60% and 80% of net profit after tax excluding non-recurring and other items.
“The implementation of a2’s dividend policy commences immediately, with the first interim dividend expected to be declared in February 2025 based on the company’s first-half result and in line with the bottom end of the range, being 60% of normalised net profit,” it said.
The board was conscious of the company’s “significant” cash balance, which was being prioritised for supply chain transformation, growth opportunities and risk mitigation.
“As a2 Milk executes its strategy and risk evolves, the board will continue to review capital management options, which may result in further capital returns to shareholders, likely in the form of special dividends over time.”
The company said its Chinese-label infant formula sales were broadly in line with its plan, taking into account supply constraints.
Production levels returned to normal during the first quarter of 2025, and trade stock was returning to target levels ahead of Chinese New Year.
English-label infant formula sales were slightly above plan because of stronger English-label category growth.
Liquid milk sales were slightly above plan because of growth in core and innovation.
Other nutritional sales were below plan due to “competitive dynamics”.
In speech notes for today’s meeting, chair Pip Greenwood said a2’s liquid milk businesses in Australia and the United States, both under new leadership, progressed well in 2024.
The company continued to progress its application for long-term US Food and Drug Administration approval to import infant milk formula into the US.
In August, the company reported an annual net profit of $167.6 million in the June year, up 7.7% and driven by a strong performance in its main market, China.
Ebitda rose by 6.9% to $234.3m, with a margin of 14.0%, up 0.2 percentage points.
A2 Milk’s closing cash position was $968.9m, which was up $211.7m on the figure a year ago.
Revenue grew by 5.2% to $1.675 billion.
Concerns about conditions in China have weighed heavily on the company’s share price, which closed at $5.38, compared with almost $8.00 in late July.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
