ACOPY - The a2 Milk Company Limited (ACOPF) Q2 2024 Earnings Call Transcript

2024-02-19 12:26:03 ET

The a2 Milk Company Limited (ACOPF)

Q2 2024 Results Conference Call

February 18, 2024 05:00 PM ET

Company Participants

David Akers - Group Head, IR and Sustainability

David Bortolussi - Managing Director and CEO

David Muscat - CFO

Li Xiao - Chief Executive, Greater China

Yohan Senaratne - Managing Director, International

Eleanor Khor - Managing Director, ANZ and Strategy

Kevin Bush - Managing Director, USA

Conference Call Participants

Tom Kierath - Barrenjoey

David Errington - Bank of America

Richard Barwick - CLSA

Marcus Curley - UBS

Sam Teeger - Citi

Stephen Ridgewell - Craigs Investment Partners

Phil Kimber - E&P Capital

Matt Montgomerie - PostBar

Lisa Deng - Goldman Sachs

Adrian Allbon - Jarden

Presentation

Operator

Thank you for standing by, and welcome to the a2 Milk Company Limited First Half '24 Results Call. [Operator Instructions]. There will be a presentation followed by a question-and-answer session. [Operator Instructions].

I would now like to hand the conference over to Mr. David Akers, Head of Investor Relations and Sustainability. Please go ahead.

David Akers

Good morning, everyone. Thanks for joining the call today. Starting on Slide 3. On the call today, we have David Bortolussi, our Managing Director and CEO; and David Muscat, our CFO. We have also our, leaders from our regions, Li Xiao, Yohan Senaratne, Eleanor Khor and Kevin Bush.

The team will present our results and outlook and there'll be time for questions at the end. I'll hand over now to David Bortolussi.

David Bortolussi

Thank you, David. Good morning, everyone, and thank you for joining the call. I'd like to get through today, so I'll start with a few key messages. Firstly, we are pleased to report a positive interim results today with revenue growth of 3.7%, EBITDA up 5% for total loan debt sales by another [Technical Difficulty] resulted in a achieving the important milestone framing a top 5 brand in the China [indiscernible].Doing so, our brand health metrics reached new hires at [Technical Difficulty] during the period, we successfully launched our new [indiscernible] China label product, and we are pleased to confirm that the transition [indiscernible]. Encouragingly, after several periods of declines, our English label sales stabilized in the first half of '24 compared to the second half of '23.

We also have additional English label products coming to market shortly, which Johan will cover later in the presentation. Finally, our revenue growth guidance for FY '24 has improved relative to our prior outlook statement. Moving to Slide 5, which summarizes our financial results. Revenue for the period was $812 million, up 3.7%. EBITDA was $113 million, up 5% with an EBITDA margin of 13.9%, up 0.2 percentage points.

Our net profit after tax was $85 million, up 15.6% and our EPS was up 18.6% to $0.11. Our net cash position at the end of the period was $792 million, up $35 million compared to June 23, and our operational cash conversion improved to 87%. Revenue growth in the half was again driven by our China segment, which was up 16.5%, while our ANZ segment sales were down 24%, reflecting the change in our distribution strategy that we've communicated previously. U.S. sales were up 8.6%, while MVM sales were down 4.7%.

From a category perspective, we grew total IMF sales by 1.5%, with China label sales up 10.4% and English label sales down 6.9%. Liquid milk sales in ANZ in the U.S. were up 1.5% and 7%, respectively, and other nutritionals were up 48.5%.Moving to Slide 6. In addition to our financial results, I'm particularly proud of what our team has achieved operationally in the half. We grew total China IMF sales in a market that was down almost 14%, achieved the top 5 brand position in the market and improved our key business health indicators.

In China label IMF, we have achieved record market share and new hires in brand health and launched our new GB registered IMF products successfully. In English label, we stabilized sales in the adjacent part and developed our O2O distribution partnership with Yuhan, which is the market leader in the channel. We also progressed development of 2 new IMF products with MVM and a new commercial supply chain partner, targeting launch of the first product in the second half of FY '24. We also commenced production of a2 Platinum Stage 4 product with MVM and another new commercial supply chain partner. Over the page on Slide 7....

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