The a2 Milk Company delivered record FY25 results with $1.9 billion in sales and announced a transformative acquisition of a New Zealand manufacturing facility, alongside divesting its stake in Mataura Valley Milk and planning a $300 million special dividend.
- Record FY25 sales of NZD 1.9 billion with double-digit revenue and earnings growth
- Acquisition of Pokeno nutritional manufacturing facility for NZD 282 million
- Divestment of 75% stake in Mataura Valley Milk for approximately NZD 100 million
- First-ever dividends declared totaling 20 cents per share and intent for $300 million special dividend
- FY26 outlook targets high single-digit revenue growth and EBITDA margin of 15-16%
Strong Financial Performance and Market Position
The a2 Milk Company Limited has reported a landmark year for FY25, posting record sales of NZD 1.9 billion, marking a 13.5% increase over the prior year. This growth was underpinned by robust double-digit increases in revenue, EBITDA, and earnings per share, driven primarily by the company’s strategic focus on the infant milk formula (IMF) market in China and expansion into emerging markets such as Vietnam.
Notably, a2 Milk has secured a top-four brand position in the highly competitive China IMF market, a significant milestone reflecting strong brand health and market penetration. The company’s English label IMF products saw double-digit sales growth, outperforming the broader market, while the China label IMF segment achieved record market share despite overall market contraction.
Strategic Supply Chain Transformation
Simultaneously, a2 Milk announced the divestment of its 75% stake in Mataura Valley Milk (MVM) to Open Country Dairy Limited, with net proceeds of around NZD 100 million. This move optimizes the company’s asset footprint and capacity utilization, while eliminating ongoing losses associated with MVM. Despite the divestment, a2 Milk will maintain a commercial supply agreement with MVM for A1 protein free ingredients, ensuring continuity of supply.
Capital Management and Shareholder Returns
Reflecting confidence in its transformed business model and strong balance sheet, a2 Milk declared its first-ever dividends totaling 20 cents per share for FY25. Moreover, the Board has signaled intent to declare a substantial special dividend of NZD 300 million, contingent on regulatory approvals related to the Pokeno facility product registrations and the completion of the MVM divestment.
The company reaffirmed its ordinary dividend policy targeting 60-80% of normalized net profit after tax and emphasized maintaining a strong, flexible balance sheet to support ongoing growth initiatives and shareholder returns.
Outlook and Growth Prospects
Looking ahead to FY26, a2 Milk expects to continue its growth trajectory with high single-digit revenue growth and an EBITDA margin in the 15-16% range. Capital expenditure is forecast between NZD 50 million and 70 million, primarily directed towards the Pokeno facility’s multi-year investment program to increase capacity and enhance manufacturing capabilities.
While the company remains optimistic, it acknowledges risks including regulatory approvals, competitive pressures in the China IMF market, and macroeconomic uncertainties. The successful integration of the Pokeno facility and the ramp-up of new China label products will be critical to realizing the full potential of its supply chain transformation.
Bottom Line?
a2 Milk’s bold supply chain moves and strong FY25 results set the stage for accelerated growth; but regulatory hurdles and market dynamics will test execution.
Questions in the middle?
- Will regulatory approvals for the Pokeno facility’s China label product registrations proceed smoothly and on schedule?
- How will the divestment of Mataura Valley Milk impact a2 Milk’s supply chain costs and product margins in the near term?
- Can a2 Milk sustain its momentum in the competitive China IMF market amid evolving consumer preferences and regulatory scrutiny?