Shares of A2 MILK FPO NZ (ASX: A2M), otherwise known as the A2 Milk Company, have fallen almost 6% today after the group reported its earnings results for the 12-months ended 30 June 2015.
The New Zealand-based dairy group company sells products containing only A2 milk proteins and not the A1 milk proteins that most other commercial milks do. It claims that these A1 proteins can leave some consumers feeling nauseated or with stomach pains so its products have been gaining traction both locally and internationally.
During the period, revenues rose 40% to $155.1 million, compared to the prior corresponding period, while underlying earnings before interest, tax, depreciation and amortisation, or EBITDA, rose 35% to $4.8 million. The company also reported a net loss of $2.1 million, although this was weighed down by costs related to its listing on the ASX earlier this year.
Pleasingly, infant formula sales grew a remarkable 445% to $41.7 million during the year and could provide significant growth in the future. Indeed, Bellamy's Australia Ltd (ASX: BAL) is profiting from a similar trend with both companies' products proving very popular both locally and in China. A2 Milk said the product now accounts for 27% of total business turnover – a remarkable achievement within just two years of its launch.
While there was plenty to like from the report it seems that investors are zeroing in on a comment management made about the takeover offer for the group from earlier this year. Management said it had had "no further communication" with either Dean Foods Company or Freedom Foods Group Ltd (ASX: FNP) since it advised their offer was not compelling. This would explain today's heavy fall.
The A2 Milk Company forecast a 76% lift in revenue in the 2016 financial year to $267 million while operating EBITDA is tipped to rise approximately 150% (before non-recurring items) to $12 million.
