A2 Corp has reported a 245 per cent increase in half-year net profit as its specialist milk products continued to gain traction in the Australian market.
The company’s shares rose 4 per cent on the NZAX to 26c, the highest level since mid-December.
Net earnings for the six months to December 31 came in at $3.1 million, or 0.57 cents per share, up from $893,517, or 0.17 cents per share, in the same period last year, according to statement filed with the NZX.
That was off a 48.7 per cent jump in revenue to $28.3m, which was further boosted by a $1.1m settlement of an outstanding legal dispute with a Korean licensee.
“Whilst the Australian supermarket chains are going head-to-head in discounting standard milk, a2TM brand sales have continued to accelerate with no change in our pricing,” said chairman Cliff Cook, adding that the company’s share of the Australian grocery channel now stood at about 4.7 per cent.
The company produces dairy products that only contains the A2 type of beta casein protein, which the company claims reduces the risk of several health conditions including heart disease, digestion problems and childhood diabetes.
Breaking down revenues by territory, its Australian operations accounted for 99.9 per cent of the company’s external sales, with New Zealand operation generating revenues of $3598 in the six months.
Earnings before interest, tax, depreciation and amortisation of $2.3m were reported for the half year, up from $1.58m, previously.
The earning momentum had given its expansion into the UK a boost of confidence, having entering the market in November last year through a joint venture with Robert Wiseman Dairies PLC.
Cost associated with its expansion came at the expense of cash holdings, which stood at $5.4m as of the record date, down from $7.5m previously.
A2 said its new fresh milk processing facility in Sydney will break ground later this month, allowing it to boost production in the New South Wales market.
By Jason Krupp