A2 Milk Company (ASX:A2M) share price slips lower despite saying revenue grew 68 per cent in FY18

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The A2 Milk Company (ASX:A2M) share price has fallen 17 cents or 1.6 per cent to $10.65 in Thursday morning trade after the company said full-year revenue grew about 68 per cent to around NZ$922 million ($A845.5 million).

In May, A2 Milk said it expected FY18 revenue to be between $NZ900 million and $NZ920 million. This was slightly below analyst expectations, something that caused the A2M share price to crash 18 per cent lower.

The dual-listed New Zealand-based dairy firm says its ratio of underlying earnings to sales for the 12 months to June 30 is expected to be about 30 per cent when it announces its results next month.

The company says the ratio is expected to remain about the same in 2018/19 despite higher expected overhead costs related to a rising headcount for China and its corporate office.

A2 expects to spend a greater portion of its revenue on marketing than in FY18 to continue investing in Australia and to support its expansion in the United States.

The firm announced its expansion into the north east region of the US in January, which it said at the time would increase its products’ reach to potentially 5,000 retail stores across the country.

A2 Milk shares have had an amazing run over the past 12 months, jumping 185 per cent higher, putting them as the 4th largest gainer in the ASX 200 over that time.

With AAP

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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Lauren Surplice is a keen follower of the stock market, investing in individual companies and funds. She follows the daily stock market news, covering the ASX stocks that are moving the markets. You can contact Lauren at laurens@thecapitalclub.com.au