Higher infant nutrition sales in China froths up a2Milk’s net profit

The a2Milk Company has delivered a 21.1 per cent jump in its net profit to $NZ184.9 million ($177.2 million) driven by surging sales of infant nutrition products to Chinese customers.

The company, which is listed on both the New Zealand and Australian stock exchanges, also lifted its results in other markets and categories, with infant nutrition sales in Australia up 9.5 per cent to $NZ352 million.

a2Milk chief executive Geoff Babidge.Credit:Eddie Jim

Total revenue for the group rose almost 32 per cent, to $NZ806.7 million, which was ahead of market consensus of $NZ773 million. Most of the company's revenue was generated by sales in the infant nutrition category, which rose 33.1 per cent to $NZ659.2 million.

"We are pleased with the results of our strategy execution and continue to be energised about our key products, core markets and growth outlook," the company said in a statement to the New Zealand stock exchange early on Thursday morning.

"With the benefit of the comprehensive work undertaken during 2019 to enhance our understanding of the consumer and sales channels in our core markets, we have continued the increased levels of investment in marketing and capability to execute our growth plan," it said.

Away from the fast-growing China market a2 more than doubled its sales in the United States, reaching total sales of $28 million. The company has a goal of generating $US100 million of annualised sales in the US market.

On a regional basis Australia/New Zealand revenue rose 10 per cent to $NZ460.2 million, while China/Asia revenue rose a hefty 76.7 per cent to $NZ317.2 million.

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