a2 Milk Company (ATM.NZ) delivered stronger-than-expected annual earnings as demand for infant milk formula in China continued to rise.
Profit attributable to shareholders climbed to NZ$202.9 million (US$120.12 million), compared with NZ$167.6 million last year. Analysts had forecast NZ$202.2 million, according to Visible Alpha. The company said English and China label sales drove the momentum.
Double-Digit Growth in Infant Milk Formula Sales
“It has been an exceptional year for our infant milk formula business,” Chief Executive David Bortolussi said. The company’s group revenue reached NZ$1.90 billion, a 13.5% rise from the previous year.
Sales in China and Other Asia grew 14% to NZ$1.30 billion. Infant milk formula products led the performance, up 10% overall, with English label volumes climbing 17% and China label sales advancing 3.3%.
Regulatory Certainty and FY2025 Outlook
The company projected net profit broadly similar to fiscal 2025. It also expects operating earnings margins to rise to 15–16%, compared with 14.4% in the latest year. Management positioned this guidance as a disciplined and stable approach to growth.
Expansion Through Manufacturing Acquisition
a2 Milk announced the NZ$282 million purchase of a New Zealand nutritional manufacturing facility from China Mengniu Dairy (2319.HK) as part of its expansion strategy. The facility already holds two China label product registrations, which the company said would strengthen its competitive positioning in its most important market.
The company stated the deal “secures opportunity for greater market access to the attractive NZ$23 billion CL IMF registered market.”
Divestment of Mataura Valley Milk
a2 Milk will divest its 75% stake in Mataura Valley Milk for about NZ$100 million alongside the acquisition. The sale will involve a NZ$130 million loss on divestment.
Shareholder Returns and Capital Discipline
The company plans to declare a special fully-franked dividend of NZ$300 million if both transactions are completed. It also announced a final ordinary dividend of 11.5 NZ cents per share.
Management said the decision reflects its focus on capital discipline and delivering value to shareholders despite the cost of restructuring.
Market Reaction and Investor Confidence
Shares of a2 Milk rose as much as 6.5% to NZ$9.29, their strongest level since mid-March, following the release of the results. Analysts cited investor confidence in both the robust financial performance and the growth potential of its China operations.
The latest results highlight China’s central role as a growth driver for New Zealand’s dairy sector. a2 Milk is positioning itself to consolidate market share in the NZ$23 billion China IMF market while balancing investment with shareholder returns, supported by rising profits, improving margins, and a strategic reshuffle.