No dividends for shareholders in boom NZ-based dairy group, A2 Milk, but directors will run a $40 million share buyback over the next year to satisfy demands from investors. And a special dividend cold be in store if the company continues to perform as well as it has been in the past year.
The company Wednesday revealed a surge in revenue in the year to June and a sharp jump in profit.
The performance by A2 stands in stark contrast to the weak $371 million loss reported by Murray Goulburn, Australia’s biggest dairy group.
A2’s specialisation and better marketing has lifted it above the pack in Australasia in the past coupe of years as the likes of Murray Goulburn and Bellamy’s have fallen by the wayside.
The only Australian company to come close in terms of performance has been Bega Cheese which reports its 2016-17 results this week.
A2 said total revenue leapt 56% to $NZ550 million in 2016-17, with net profit up nearly 200% to $NZ90.6 million. Earnings before interest, tax, depreciation and amortisation surged 159% to $NZ141.2 million as gross profit margins jumped to 26 cents in the dollar from an already solid 15 cents in 2015-16.
Directors said the record result flowed from the “continued strong growth in sales and market share for a2 Platinum infant formula in Australia and China, sales growth of a2 MilkTM branded fresh milk and milk powders in Australia.
As well the company said it increased investment in building brand awareness in the United States, saw positive operating earnings in the United Kingdom (UK) and developed “a broader nutritional products strategy and a new focus on emerging markets.”
"The Board has been evaluating capital management alternatives whilst continuing to maintain a flexible and conservative capital structure and now intends to establish an on-market buyback of the Company’s shares over the next 12 months of up to $40 million. Further details of the on-market buyback will be announced prior to commencement of the buyback.
"In addition, the Board remains open to consider the merits of a special dividend in light of progress on the buyback and future market conditions,” directors said this morning.
