The a2 Milk Company Limited (ACOPF) Q2 2025 Earnings Call Transcript

2025-02-17 11:34:53 ET

The a2 Milk Company Limited (ACOPF)

Q2 2025 Earnings Conference Call

February 16, 2025, 5:00 PM ET

Company Participants

David Bortolussi - Managing Director and Chief Executive Officer

David Muscat - Chief Financial Officer

Li Xiao - Chief Executive, Greater China

Yohan Senaratne - Managing Director, International

Eleanor Khor - Managing Director, ANZ and Strategy

Conference Call Participants

Sam Teeger - Citi

Thomas Kierath - Barrenjoey

Matt Montgomerie - Forsyth Barr

Phillip Kimber - E&P

Adrian Allbon - Jarden

Josephine Forde - Bank of America

Lisa Deng - Goldman Sachs

Richard Barwick - CLSA

Marcus Curley - UBS

Julia de Sterke - Morgan Stanley

Stephen Ridgewell - Craigs Investment Partners

Presentation

David Bortolussi

Good morning, everyone, and thank you for joining us today for The a2 Milk Company's Interim Results Presentation for the First Half of FY'25. My name is David Bortolussi, I'm the Managing Director and CEO, and today, I'm joined on the call by our CFO, Dave Muscat and leaders from our regions, Li Xiao; Yohan Senaratne; and Eleanor Khor. The team and I will present the results and outlook and as always, there will be time at the end for questions.

Starting on Slide 4. I'm very pleased to share the results of our team's execution of our growth strategy, which has delivered another period of strong operational and financial performance. We experienced significant supply constraints during the period, which we've overcome and continue to focus on driving growth in China and Other markets within and outside of the Infant category. Our ongoing focus on brand investment, product innovation and supply chain transformation have enabled us to continue to grow in challenging market conditions.

Our solid first half results and positive momentum going into the second half have resulted in us upgrading our FY'25 full year guidance, which I'll cover in more detail later. In our Infant Milk Formula business, which I'll refer to as IMF, we delivered double-digit revenue growth in English label and achieved record market share in China label. We launched new products targeting all life stages from infants to seniors, and today, we are pleased to declare our first ever dividend following the announcement of our dividend policy at our Annual Meeting last year.

Moving to Slide 5, which summarizes our financial results. We delivered 10% revenue growth which was at the top end of our guidance range. EBITDA was up a lesser 5% due to significant air freight costs incurred to mitigate supply constraints, which have now been resolved.

Excluding this impact, EBITDA would have been up 12% with an EBITDA margin of 14.2%. Net profit after tax and EPS grew by around 7.5%, which was impacted by air freight and also by accelerated depreciation of the MVM coal boiler. Excluding these impacts, net profit after tax would have been up 18%. Cash conversion was over 100% and we declared an interim dividend of $0.085 per share, fully imputed and fully franked.

Slide 6 outlines our Segment and Product category performance. The growth continues to be driven by our China segment led by double-digit revenue growth in English label, IMF and other nutritionals. The decline in our ANZ segment, which was primarily due to lower IMF sales, driven by a further decline in the Daigou channel, was partially offset by growth in our Australian Liquid Milk business. Our US business continued to grow driven by Liquid Milk with an ongoing focus on improving profitability and MVM experienced a significant increase in external ingredient sales mainly due to higher GDT pricing....

Read the full article on Seeking Alpha

For further details see: