A2 Milk share price jumps 12% on solid half-year results

This infant formula company's shares are catching the eye on Monday.

| More on:
2 women looking at phone

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The A2 Milk Company Ltd (ASX: A2M) share price is starting the week with a bang.

In morning trade, the infant formula company's shares are up 12% to $5.67.

This follows the release of its half-year results today.

A2 Milk share price jumps on half-year results

  • Revenue up 3.7% to NZ$812.1 million
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) up 5% to NZ$113.2 million
  • Net profit after tax up 15.6% to NZ$85.3 million
  • Cash balance increased 12% to NZ$792.1 million

What happened during the half?

For the six months ended 31 December, A2 Milk reported a 3.7% lift in revenue to NZ$812.1 million.

Management advised that this was driven by continued growth in the China & Other Asia segment (up 16.5%), partially offset by a 24.1% decrease in the ANZ segment due largely to a change in distribution strategy. Elsewhere, USA revenue increased by 8.6% and MVM decreased by 4.7%.

Infant milk formula (IMF) sales grew 1.5% with China label up 10.4% and English label down 6.9%. Liquid milk sales also grew modestly, with ANZ sales up 1.5% and USA sales up 7.0%. Other nutritional sales grew by 48.5% and ingredients sales (MVM) decreased by 4.7%.

A2 Milk's gross margin came in at 46.7%, which was 0.2ppts higher than FY 2023 but 0.9ppts lower than the prior corresponding period. This was primarily due to higher input costs, foreign exchange movements, and the adverse impact of sales mix, which offset price increases and cost savings.

Nevertheless, the company's EBITDA increased by 5% to NZ$113.2 million. This reflects increased revenue, lower administrative and other expenses, and higher net interest income.

But despite the company reporting a 12% increase in its cash balance to NZ$792.1 million, it will not be paying a dividend. Management advised that it has decided to continue to prioritise investment in growth opportunities and balance sheet strength, ahead of returning capital to shareholders.

Outlook

Management warned that China IMF market conditions remain challenging with a double-digit decline in market value still expected in FY 2024.

Nevertheless, A2 Milk's revenue growth guidance for FY 2024 has improved since its prior outlook statement. It expects revenue growth of low to mid single-digit percent for the year. It also expects its margins to be largely in line with what was recorded in FY 2023.

The A2 Milk share price is still down 12% over the last 12 months despite today's gain.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Earnings Results

Soul Patts share price struggles on falling profits

ASX 200 investment house Soul Patts reported its half year results this morning.

Read more »

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Earnings Results

Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

Brickworks share price tumbles on disappointing half-year loss

This loss didn't stop the company from increasing its dividend again.

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Coal miner holding a giant coal rock in his hand making a circle with his hand, symbolising a rising share price.
Energy Shares

New Hope share price charges higher despite profit crunch and huge dividend cut

Weaker coal prices have hit this miner's profits and dividend hard.

Read more »

A Chinese investor sits in front of his laptop looking pensive and concerned about pandemic lockdowns which may impact ASX 200 iron ore share prices
Earnings Results

Liontown share price tumbles 7% on half-year results

This lithium developer's results have been released this afternoon.

Read more »

A man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises today.
Earnings Results

Sayona Mining share price jumps despite $32m half-year loss

The Sayona Mining Ltd (ASX: SYA) share price is pushing higher on Thursday. At the time of writing, the lithium…

Read more »