With markets facing uncertainties, fears of trade war looming, one of the growth stocks is betraying its bullish potential.
The a2 Milk Company Limited (ASX: A2M)
The a2 Milk Company has delivered a strong financial performance for the first half of the 2025 financial year, underpinned by double-digit revenue growth, record market share gains in China, and strategic product innovation. The company’s revenue increased by 10.1% to $893.8 million, reflecting strong demand across its key markets. This momentum has led to an upgrade in its full-year revenue and earnings guidance, with expectations now set for low to mid double-digit growth compared to the prior year.
The company’s infant milk formula (IMF) business continues to be a major driver of growth, with total IMF sales increasing by 7.2%. English label IMF recorded a 13% growth, supported by a recovery in demand and stronger performance in key retail and e-commerce channels. China label IMF also achieved record market share of 5.3%, up from 4.9% in FY24, despite temporary supply constraints that were successfully resolved during the period. The company’s focus on brand investment and premium product offerings has strengthened its position as a top-five player in the Chinese IMF market, where overall market conditions remain challenging due to declining birth rates.
In addition to its success in IMF, a2 Milk’s liquid dairy business delivered solid growth, with sales in Australia and New Zealand increasing by 11.2% and the U.S. market posting a 13.4% increase. The company gained market share in both regions, driven by strong consumer demand for a2 Milk® and a2 Milk® Lactose Free products. In the U.S., profitability improved as the company expanded distribution and introduced its premium a2 Milk® Grassfed product.
Innovation has remained a key focus for a2 Milk, with the successful launch of a2 Genesis™, a new super-premium English label IMF product targeting the growing HMO (human milk oligosaccharide) segment. The company has also expanded its fortified milk powder range with products aimed at the seniors and kids’ nutrition segments. Further strengthening its global footprint, a2 Milk has commenced sales of a2 Platinum® IMF in Vietnam, with plans to launch its newly registered a2 Gentle Gold™ product in the second half of FY25.
For the first time in its history, the company has introduced a dividend policy and declared an interim dividend of 8.5 cents per share, fully imputed and fully franked. This decision reflects a2 Milk’s strong financial position, with net cash of $1.014 billion at the end of the period and an operating cash conversion rate of 106%. The company’s earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 5% to $118.9 million, despite absorbing approximately $8 million in non-recurring airfreight costs to mitigate temporary supply issues. Net profit after tax (NPAT) rose 7.6% to $91.7 million, with basic earnings per share increasing to 12.7 cents.
a2 Milk is focused on securing additional China label IMF registrations to support future growth and is also making progress in developing its own nutritional manufacturing capabilities as part of its broader supply chain transformation strategy. The company remains committed to further innovation, expanding its presence in key markets, and driving shareholder value through sustained revenue and earnings growth.
(Source: Company's Report)
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