Top-performing stock on NZX 50 in 2017 cites 'pleasing' start of 2018 year

A2 Milk said its recent launch of Australian fresh milk into Singapore was "progressing well."

A2 Milk, the best-performing stock on the benchmark S&P/NZX 50 Index this year after its annual profit tripled, signalled that growth has continued into the current financial year.

The company, which markets milk with a protein variant said to have health benefits, outlined positive developments in its Australia and New Zealand, China and other Asia, US and UK markets in presentation notes for delivery at a UBS investor conference in Sydney today, although it stopped short of providing detailed figures, noting it would give an update at its annual meeting of shareholders on November 21. Its shares rose 3.1% to $7.64 and have soared 248% this year.

In Australia and New Zealand, its largest geographic market, a2 said fresh milk is "performing well," with "pleasing" growth in the first four months of the 2018 financial year, compared with the same period a year earlier. It noted a2 Platinum infant formula continues to be a "significant contributor" and there had been "strong consumer takeup" from its successful launch of a2 Platinum Stage 4 product, and "strong growth" in its a2 Milk branded skin and whole milk powders.

The company noted a pending court hearing in the Australian Federal Court had been vacated from this month until the New Year, with a date to be determined. A2 faces a legal challenge in Australia from rival Lion Group over the science behind health-related claims about the milk. A2 had taken Lion to court over its milk brand's use of A2 protein claims, seeking an injunction and damages.

In a2's 'China and other Asia' market, the company said it is building a local team to support sales growth, and it remains focused on distribution expansion through mother-baby stores. The company noted its market share for its a2 Platinum infant formula brand continues to strengthen, with Kantar Infant Formula market tracking for the quarter ending September 8 showing a market share lift to 4.1% from 3.5% in the quarter ended June 30.

A2 said its recent launch of Australian fresh milk into Singapore, its first Southeast Asia initiative, was "progressing well" and noted it had achieved China Food and Drug Administration registration for its China label infant formula.

The company said it's continuing to build distribution in core regions in the US and is building sales following advertising and media campaigns. It said it is investigating new product opportunities for the market.

A2 said it was making "pleasing progress" in the rate of sale for fresh milk in the UK, and achieving "continued growth" in its distribution footprint. A2 Platinum infant formula sales in the wholesale channel were in line with the previous corresponding quarter, and the company said it's continuing to assess incremental opportunities in Europe and the Middle East.


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