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A2 scotches talk of infant formula woes; shares gain

Wednesday 21 December 2016 02:50 PM

A2 scotches talk of infant formula woes; shares gain

By Paul McBeth

Dec. 21 (BusinessDesk) - A2 Milk Co shares gained after the milk marketer played down fears about the infant formula market stemming from ASX-listed rival Bellamy's Australia's extended trading halt.

The stock gained 5.4 percent to $2.15, having been under pressure since Dec. 12 when Bellamy's sought a trading halt, stoking speculation about the formula market.

Auckland-based, Sydney-headquarter A2's infant formula business is still underpinning significant sales growth, it said in a statement. The stock fell as much as 15 percent after Bellamy's entered the trading halt, extended today pending negotiations with key suppliers and manufacturers that could affect earnings. Bellamy's was to have lifted the trading halt today but now expects the suspension to stay in place until Jan. 13.

In a statement, A2 said it "notes the higher level of recent comment and interest from shareholders relating to the infant formula market" and that "the business continue to trade very strongly, reflecting, in particular, significant year-on-year growth in its infant formula business".

At its November annual meeting, A2 told shareholders revenue was up 96 percent to $155.2 million in the first four months of the financial year, generating earnings before interest, tax, depreciation and amortisation of $35.5 million.



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