A2 has formula for success

NEW Zealand’s A2 Milk Company has more than doubled its full- year profit thanks to continued strong demand for its baby formula in Australia and China.

A2 reported a net profit after tax of $ NZ195.7 ($ A177.9 million) for the year to June 30, up 116 per cent on the previous year.

The dual- listed company said its revenue jumped 68 per cent to $ NZ922.7 million, led by the continued success of its baby formula, A2 Platinum. A2 Platinum sales revenue rose 84 per cent to $ NZ724.2 million, with the baby formula’s market share strengthening to 32 per cent in Australia and 5.1 per cent in China.

New managing director Jayne Hrdlicka ( pictured) said the year had been “transformative” for the company.

“Significant progress has been achieved in Australia, China and the US and important emerging market opportunities are starting to materialise,” Ms Hrdlicka said in a statement.

“The ongoing momentum reflects the growing strength of our brand proposition, continued execution success in our end markets and in management of the supply chain.”

In Asia, revenue surged 163 per cent to NZ$ 233.6 million.

The company credited increased brand awareness and its presence in 10,000 Mother & Baby stores in China for the success.

A2 has also expanded well into the US market, with a presence in about 6000 stores including Whole Foods, Costco and some Walmart stores.

The company says it has also extended its strategic partnerships with other milk suppliers.

In July, A2 extended a supply deal with Synlait Milk by two years and raised its stake in the milk supplier to 17.4 per cent.

It has also secured partnerships with Fonterra and distributor China State Farm.

The recent deals will allow the company to expand but will also result in higher overhead costs and marketing expenses as a percentage of sales in 2019, the company said.