A2 shares rise on back of prosperous outlook

A2 Milk is forecasting first-half revenue of up to $800 million, compared to turnover for the whole of last year of $1.3 billion.

Shares in the company rose sharply from $12.77 $14.98 last week. The close of the first half is not for another six weeks.

Fisher Funds senior portfolio manager Sam Dickie said the step up in investment in brand and capability flagged in August was already paying off. ‘‘This demonstrates the company is not only executing well right now but is in the early stages of successfully widening its moat for the future.’’ Referring to the ‘‘negative noise’’ recently related to revenue growth, profitability, and chief executive Jayne Hrdlicka, Dickie said the concerns had been ‘‘blown out of the water’’.

Last year shareholders reacted negatively to the news Hrdlicka had sold off $4.36m worth of her shares, after the ex-jetstar head had been in the job only two months. It was viewed in some quarters as demonstrating a lack of confidence in the company.

Hrdlicka said China and the United States would be top performers this year. Infant nutrition sales for China are forecast to be about $135m, a growth rate of 84 per cent, while US sales should climb to about $27m, a growth rate of 110 per cent.

A2 also released a revised remuneration plan. One of the key components says that for management to receive all the performance rights shares on offer, the company’s sales will have to grow year-on-year by 22 per cent.

Dickie said Bloomberg was expecting a growth rate of 19-20 per cent. ‘‘Given what I know about the senior management team of A2 ... they will move hell and high water to achieve these long-term incentives.’’

A2 has not yet released details of how many shares top executives might have vested in them.

They will also have to buy and hold a minimum shareholding equivalent to 100 per cent of their salary and employer superannuation contributions.