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A2 raises FY earnings forecast on high demand for formula

A2 raises annual earnings forecast on high demand for Platinum infant formula

By Tina Morrison

Dec. 18 (BusinessDesk) - A2 Milk Co, which markets milk with a protein variant said to have health benefits, raised its annual earnings forecast, citing better-than-expected sales of its a2 Platinum-branded infant formula.

Operating earnings before interest, tax, depreciation and amortisation are expected to rise to between $33 million and $37 million in the year ending June 30, 2016, ahead of its November forecast of $22 million and year-earlier ebitda of $4 million, the Auckland-based, Sydney-headquartered company said in a statement.

Annual revenue is forecast to rise to between $300 million and $315 million, ahead of the November forecast of $285 million and from $154 million in 2015, it said.

A2 raised $40 million in a discounted share placement in October to help drive growth of infant formula sales in China, Australia and New Zealand. Today's earnings upgrade is the second in as many months as demand for a2's Platinum branded infant formula continues to exceed expectations.

"The infant formula market in Australia is rapidly evolving and experiencing significant growth," said managing director Geoffrey Babidge. "The company has recently increased the supply of a2 Platinum infant formula to our customers however we continue to experience a level of out of stocks on shelf. The strong trading performance advised today provides further evidence of the increasing appeal of the a2 Platinum brand in Australia and China and the growth potential in additional markets in the future."

The company's shares last traded at $1.11 and have soared 91 percent so far this year, making them the best performer on the S&P/NZX50 benchmark index.


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