David Bortolussi, Managing Director of A2 Milk. Photo / Provided
A2 Milk’s share price rose sharply after the company reported a 42% rise in annual net profit to $114.7 million, driven by strong growth in its infant formula business in China.
The company also said it intended to repay the capital through a $150 million market buyback.
By mid-morning, shares of a2 Milk were up 34 cents or 6.2% at $5.81.
The company’s results showed that full-year June revenue rose 19.8% to $1.44 billion.
Earnings before interest, taxes, depreciation and amortization (ebitda) increased 59.0% to $196.2 million.
Cash on hand amounted to $816.5 million.
A2 said it faces a positive outlook for 2023 with high single-digit revenue growth and Ebitda margin improvement expected.
Chief Executive David Bortolussi said it had been a successful year as the company returned to double-digit revenue and profit growth despite significant headwinds.
“We are pleased with the progress made in stabilizing the business, refreshing our strategy and improving our execution,” he said.
“Our significant increase in marketing investments has resulted in further gains in brand health metrics and record market shares, driving strong growth in our infant formula business in China,” he said.
Chinese-label and English-label infant formula sales increased by 12.2% and 11.6%, respectively.
Fluid milk sales in Australia-New Zealand and the United States increased by 1.8% and 30.2%, respectively.
“Our significant increase in marketing investments has resulted in further gains in brand health metrics and record market shares, driving strong growth in our infant formula business in China,” Bortolussi said.
The company has remained committed to the unofficial daigou channel and 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 challenging macro environment.