a2 Milk Company Ltd (ASX: A2M) shares are starting the week on a very positive note.
In morning trade, the infant formula company's shares are up 12.5% to $9.60.
Investors have been buying its shares after it delivered strong first-half growth and upgraded its full-year outlook.
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A2 Milk shares jump on results day
For the six months ended 31 December, a2 Milk reported revenue of NZ$993.5 million, up 18.8% on the prior corresponding period.
Management notes that this was driven by strong performances across all segments and product categories, with growth primarily from core products supported by recent innovation.
Total infant milk formula (IMF) sales increased 13.6%, underpinned by continued brand strength and solid execution across channels. Liquid milk sales rose 18.5%, while Other Nutritionals revenue surged 42.9% (excluding a2 Pokeno ingredient sales).
Also growing strongly was its underlying EBITDA, which rose 25.9% to NZ$164.8 million, while underlying net profit after tax increased 19.6% to NZ$122.6 million. On a statutory basis, net profit after tax rose 9.4% to NZ$112.1 million.
The board declared an interim dividend of 11.5 NZ cents per share, up 35.3% year on year, representing around 74% of net profit from continuing operations.
Management commentary
A2 Milk's managing director and CEO, David Bortolussi, was pleased with the half. He said:
We continue to execute our growth strategy with a focus on maximising opportunities in China infant milk formula, adjacent categories and new markets.
Infant milk formula remains central to our growth strategy and continues to outperform the China market, delivering 13.6% year-on-year revenue growth. Our liquid milk businesses continue to perform exceptionally well in Australia and the US, with both achieving double-digit revenue growth as more consumers embrace the benefits of a2 Milk.
The Company's strong performance in the half has enabled us to upgrade our FY26 full year guidance and declare an interim dividend at the higher end of our policy range.
Outlook
As mentioned above, A2 Milk has upgraded its FY 2026 guidance following a stronger than expected first half.
The company now expects revenue growth in the mid double-digit percentage range (from low double-digit) compared to FY 2025 continuing operations. EBITDA margin is forecast to be approximately 15.5% to 16.0%, with net profit expected to be up on FY 2025 reported levels.
Bortolussi adds:
Our upgraded outlook means we are now on track to achieve our $2 billion medium term sales ambition in FY26, a full year ahead of plan. This is testament to the execution of our team and the strength of the a2 brand.
