On a day when both ASX 200 and All Ordinaries index are down by more than 140 points each, some stocks from ASX listed companies stand defiantly. One among such potential growth companies is
The a2 Milk Company Limited (ASX: A2M)
The a2 Milk Company Limited (ASX: A2M) made significant strides in FY24, executing its growth strategy, which focuses on four main pillars: people, planet, consumers, and shareholders. The company is among high growth stocks having emphasized its key objectives such as expanding distribution, introducing new products, and enhancing organizational capabilities. A major achievement was the successful re-registration and transition of its China label infant milk formula (IMF) to meet new GB standards, which helped a2 Milk secure a top-5 position in China's competitive IMF market. Despite challenges like a decline in the newborn population and economic factors, the company’s China label business grew, with the A2 protein segment continuing to gain market share.
In FY24, the company achieved impressive financial results, with revenue rising by 5.2% to $1.68 billion. EBITDA grew by 6.9% to $234 million, and net profit after tax (NPAT) increased by 7.7% to $168 million. The growth was particularly driven by the China and Other Asia segment, which saw a 14% increase. The company’s liquid milk businesses in Australia and the U.S. also saw positive results, while its Other Nutritionals segment grew by 37%. However, the ANZ segment faced a 15% decline due to changes in the English label IMF distribution strategy, which shifted from Daigou to cross-border e-commerce and online channels. Despite these challenges, a2 Milk maintained strong cash flow and a healthy balance sheet, supporting its plans for supply chain transformation.
The company’s commitment to innovation was evident in product launches like the upgraded a2 Zhichu® infant formula and new fortified milk powders targeting the senior market. This drive for innovation extended into geographical expansion, with a2 Milk entering markets like Korea, Singapore, and Vietnam. The company also placed a strong emphasis on sustainability, achieving a 45% reduction in Scope 1 and 2 emissions through the electrification of the MVM boiler and investing in the AgriZeroNZ initiative. These efforts align with the company’s broader goal to lead in both environmental responsibility and market growth.
The company is optimistic about future growth, forecasting mid to high single-digit revenue growth in FY25. This outlook is supported by the stable performance of its China label IMF sales, better-than-expected results in English label IMF, and growth in its liquid milk and Other Nutritionals segments. To enhance shareholder returns, a2 Milk introduced a dividend policy, aiming for a payout ratio between 60% and 80% of normalized NPAT. The first dividend under this policy is expected in February 2025, marking a new phase in the company’s commitment to capital management and shareholder value.
Source: Company’s Report
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