Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


A2 posts 22% gain in first-half sales, commits to US market

A2 posts 22% gain in first-half sales, commits to US market push

Feb. 26 (BusinessDesk) – A2 Corp, whose shares have soared 564 percent in the past three years, reported a 22 percent increase in first-half sales, while increased marketing costs restrained earnings, and said the US will be its next target market.

Profit was $643,000 in the six months ended Dec. 31, from $554,000 a year earlier, the Auckland-based company said in a statement. Sales rose to $54 million from $44.3 million and its gross margin rose 35 percent to $19.9 million.

A2 holds and commercialises patents, trademarks and proprietary processes relating to milk containing A2 beta-casein type milk protein. It cites studies that A1 beta-casein found in most milk may lead to health problems for some consumers. Investors have cheered the company’s growth strategy and A2 shares climbed 4.3 percent to 97 cents on the NZX today, matching the record reached earlier this month and up from about 14 cents in February 2011.

Global expansion is being funded from returns in the Australian market, which made up 97 percent of sales in the first half and generated about $2.3 million of segment earnings before interest, tax, depreciation and amortisation. More than 84 percent of Australian sales come from three customers.

A2 has grabbed about 8 percent of Australia’s market share by value in grocery and expects to achieve 10 percent market share ahead of schedule.

In the same period, marketing expenses jumped 142 percent to $5.4 million in support of A2 fresh milk sales in Australia and the launch of A2 Platinum infant formula in China, Australia and New Zealand.

Sales in New Zealand were $1.7 million and EBITDA was $978,000.

A2’s other marketing push is into the UK where it bought out its joint venture partner as of last month. All up, the company had about $13 million cash on hand as at Dec. 31. Operating cash inflows from Australia of $6.2 million contributed to $4.4 million of working capital and $2.7 million launch costs for infant formula and a cash investment for the UK joint venture of $4.5 million, the company said today.

“We’re reinvesting our strong and increasing profits out of the Australian business in key opportunities in the UK and China,” managing director Geoffrey Babidge told BusinessDesk. “We have adequate funding to continue our initiatives.”

He declined to give full-year guidance. The strategy for entering the US market hasn’t yet been finalised and Babidge said it was too early to comment on the likely funding commitment to that market.

The strategy in China, where A2 sells infant formula made under contract in New Zealand by Synlait Milk, has been to emphasise the integrity of the supply chain and the high quality of ingredients. In the US, consumers “are very interested in product innovation and health,” and milk will be sourced locally.

The company has been building a databank of A2 cows in the US in preparation for entering the market and is attending the influential Anaheim Natural Products Expo in California next month. A2 plans to establish a US subsidiary and hire a small management team.

“There’s a very strong appetite – the demographic is ideally suited,” Babidge said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Maritime: Navigation Safety Review Raises Big Issues For The Govt

Shipping Federation: "The reports makes it clear that the ratification of the Maritime Labour convention (MLC) is long overdue. Only when the MLC is ratified will Maritime NZ be able to inspect and enforce the labour conditions on international ships visiting our ports." More>>

ALSO:

100 Years After Einstein Prediction: Gravitational Waves Found

For the first time, scientists have observed ripples in the fabric of spacetime called gravitational waves, arriving at the earth from a cataclysmic event in the distant universe. This confirms a major prediction of Albert Einstein’s 1915 general theory of relativity and opens an unprecedented new window onto the cosmos. More>>

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news