A2 Milk’s Profit Growth Surges, Raises Annual Revenue Outlook
A2 Milk, the New Zealand-based dairy company, experienced a notable boost in its shares, rising 7.4% to reach its highest level since June. The surge comes after the company surpassed market expectations for its half-year profit and increased its annual revenue outlook.
In the six months through December, A2 Milk reported a net profit of 85.3 million New Zealand dollars, surpassing the NZ$73.8 million figure recorded in the same period the previous year. Furthermore, the half-year revenue totaled NZ$812.1 million, representing a significant increase from the NZ$783.3 million reported a year earlier.
A2 Milk’s upgraded annual revenue outlook indicates a low-to-mid single-digit growth for the current fiscal year, showcasing an improvement from its prior forecast of low single-digit growth. Financial services company Citi commended the company’s performance, noting that the better-than-expected profit for the first half was driven by increased sales, a higher margin, and better net interest costs.
“The combination of a better-than-expected result, FY 2024 guidance upgrade, and new product development is likely to trigger investors who have been underweight the stock to revisit it, which should mean the recent strong share price performance is likely sustainable,” Citi stated. As a result, A2 Milk’s shares have recently traded at NZ$5.80.
With its skyrocketing profit growth and revised annual revenue outlook, A2 Milk is set to attract the attention of investors who have previously overlooked the stock. This positive momentum suggests that the company’s recent strong performance may be sustainable in the long run.
Analyst comment
Positive news. The market is expected to react positively to A2 Milk’s strong half-year profit and raised revenue view. A2 Milk’s shares are likely to sustain their recent strong performance as investors reconsider their position and new product development drives growth.
