Shares dip despite profits over $1b

SHARES in The a2 Milk Company have slumped 18.5 per cent since the milk processor announced record revenue and profits.

The stock closed at $13.47 a share on Monday, well down on the $16 closing price on Tuesday last week – the day before its 2018-19 results announcement.

That was despite The a2 Milk Company announcing two weeks ago a 41.4 per cent rise in revenue to $NZ1304.5 million ($A1234.2 million) for the year to June 30, the first time it had topped the $A1 billion mark.

Net profit after tax rose 47 per cent during the past year to $NZ287.7 ($A272.2 million).

The share price fell in line with the general decline in stocks on the ASX but also due to the profit being lower than the market expected.

The a2 Milk Company’s managing director, Jayne Hrdlicka, said she expected the dairy processor’s earnings growth in 2019-20 to continue at about 28 per cent.

She said Australia, New Zealand, China and the US provided the most significant growth opportunities in the medium term, but a2 was looking to expand into other Asian markets as well.

“As part of this, we undertook increased consumer research and in-market activity in Vietnam, Korea and the city of Hong Kong,” she said.

“Alongside the ongoing work we are doing with Fonterra, the focus continues to be milk powder products in Vietnam, testing a fresh milk presence in Singapore and Korea, and infant formula in the city of Hong Kong.”

Infant nutrition sales in China and other markets in Asia rose 73.4 per cent in value to $NZ393.1 million, accounting for 96.9 per cent of The a2 Milk Company’s sales of all products in the region.