A2 Milk shares are closing in on a 52-week high after the infant formula and dairy group delivered a strong first half and lifted its full-year outlook, pointing to solid demand in China.
First-half net profit of NZ$112 million (A$96 million) came in 7% above consensus and 11% ahead of Citi estimates, with underlying earnings supported by lower-than-expected supply chain losses. English label sales rose 13.6% and Chinese label sales increased 6.5%, while A2’s HMO product Genesis recorded strong month-on-month growth, which management said supports longer-term potential.
Citi analyst Sam Teeger described the conference call as “quite positive”, citing a range of growth drivers including market share gains, new product launches in China and expansion in Vietnam. “The better-than-expected result and upgraded guidance support our recent trip feedback, where we concluded that execution for our top pick in F&B remains strong,” Teeger said.
Key financials and FY26 outlook
- Revenue up 18.8% to $993.5 million, driven by strong performance across all segments and products, with growth primarily from core products supported by recent innovation and slightly benefiting from FX and a2 Pokeno sales
- China & Other Asia segment revenue up 20.3%, ANZ up 8.6% and USA up 29.0%
- EBITDA up 18.4% to $155.0 million, with underlying4 EBITDA up 25.9%
- EBITDA % margin of 15.6% consistent with prior year, with underlying4 EBITDA % margin of 16.6% up 0.9ppts
- Net profit after tax (NPAT) up 9.4% to $112.1 million, with underlying4 NPAT up 19.6%
- Basic earnings per share (EPS) up 9.2% to 15.5 cents, with underlying4 EPS up 19.4% to 16.9 cents
- Closing cash of $896.9 million, with operating cash conversion of 90.8%7
- Interim dividend of 11.5 cents per share declared, unimputed and fully franked (~74% NPAT payout)
- FY26 revenue growth guidance increased from low double-digit8 percent to mid double-digit8 percent with improved EBITDA % margin range expected.