a2 Milk Posts NZD 893.8m Revenue, 7.6% Profit Rise in 1H25
The a2 Milk Company posted robust first-half FY25 results, lifting revenue by 10.1% and net profit by 7.6%, while introducing a dividend policy for the first time. Strong English label IMF sales and liquid milk growth underpin an upgraded full-year outlook.
- Group revenue increased 10.1% to NZD 893.8 million
- Net profit after tax rose 7.6% to NZD 91.7 million
- English label infant milk formula sales grew double digits, driven by CBEC and O2O channels
- Introduced inaugural dividend policy with an 8.5 cents per share interim dividend
- Upgraded full-year revenue and earnings guidance reflecting strong market demand
Strong Financial Momentum in 1H25
The a2 Milk Company Limited has delivered a solid first half for FY25, reporting a 10.1% increase in group revenue to NZD 893.8 million and a 7.6% rise in net profit after tax to NZD 91.7 million. This performance reflects the company’s successful navigation of supply constraints and market dynamics, particularly in its infant milk formula (IMF) segments.
Despite facing temporary supply chain challenges that necessitated approximately NZD 8 million in incremental airfreight costs, a2 Milk maintained an EBITDA margin of 13.3%, only slightly down by 0.6 percentage points. The company’s operational cash conversion remained robust at 106%, underscoring efficient working capital management.
English Label IMF and Liquid Milk Drive Growth
Growth was primarily driven by the English label IMF segment, which saw double-digit revenue increases fueled by cross-border e-commerce (CBEC) and online-to-offline (O2O) channels. This segment’s recovery is notable given the broader challenges in the China label IMF market, which declined by 8% in value but where a2 Milk still managed to grow sales by 2% and capture a record 5.3% market share.
Liquid milk sales also contributed significantly, with double-digit growth in both Australia/New Zealand and the USA markets. The USA segment revenue rose 13.3%, supported by expanding club channel sales and improved profitability through cost optimisation.
Strategic Innovations and Market Expansion
a2 Milk ramped up product innovation with launches targeting infants, kids, and seniors, including the new a2 Genesis™ HMO formulation product and fortified milk powders produced locally in China. The company also expanded into emerging markets such as Vietnam, signaling a broadening geographic footprint.
Marketing efforts intensified, particularly in China, with campaigns emphasizing the unique benefits of A1 protein-free milk and leveraging influential endorsements to strengthen brand health and consumer education.
Dividend Policy Marks a New Chapter
In a significant milestone, a2 Milk introduced its first-ever dividend policy, declaring an interim dividend of 8.5 cents per share, representing approximately 67% of net profit after tax. This move reflects confidence in the company’s cash flow generation and commitment to delivering shareholder value.
Upgraded FY25 Outlook and Medium-Term Ambitions
Buoyed by stronger-than-expected demand and favourable currency movements, a2 Milk upgraded its full-year guidance to anticipate low to mid double-digit revenue growth and a slight improvement in EBITDA margin. The company remains on track to achieve its medium-term revenue ambition of around NZD 2 billion by FY27, with ongoing investments in supply chain transformation and innovation.
However, the company acknowledges risks including supply chain complexities and evolving market conditions in China, which will require continued strategic agility.
Bottom Line?
With upgraded guidance and a new dividend policy, a2 Milk signals confidence but must navigate ongoing supply and market headwinds.
Questions in the middle?
- How will a2 Milk sustain growth amid China’s evolving IMF market and demographic shifts?
- What impact will the new dividend policy have on investor sentiment and share price momentum?
- Can supply chain transformations keep pace with the company’s ambitious innovation and expansion plans?
