a2 Milk Company Ltd share price takes off after reporting profit jumps by 150%

ASX:SFH

a2 Milk Company Ltd (ASX:A2M) on Wednesday reported a first half profit of $98.5 million, a 150% increase over the same period a year earlier.

a2 Milk Company Ltd posted revenue of $434.7 million in the period. This was 70% higher than the same period last year.

The a2 Milk share price has taken off in Wednesday morning trade, jumping $2.00 or 22.96% to $10.71.

The a2 Milk Company Limited (a2MC) is engaged in the commercialisation of a2MC branded milk and related products as supported by the ownership of intellectual property that enables the identification of cattle for the production of A1 protein-free milk products.

Managing Director Geoffrey Babidge said: “Our financial performance reflects the growing strength of our brand proposition, the successful execution of in-market growth strategies and the continued strong performance of our supply chain.

Continuing strong performance and the consequent strength of our financial position mean the Company is very well positioned to continue to execute its growth strategy in both existing and targeted markets.”

Outlook

a2 Milk advised earnings growth in the second half will be tempered by a higher marketing expense, with a half-on-half increase now likely to be in the range of ~NZ$35 – $40 million given the timing and scope of marketing programmes in China and the United States. This increased brand investment will further support future growth in these key markets.

The a2 Milk Company Ltd share price has gained 43.96% since the beginning of the year, while the S&P/ASX 200 Index has fallen roughly 2.12%. The a2 Milk share price has gained 367.39% in the last 12 months.

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au