The a2 Milk Company is anticipating ongoing revenue growth across its key regions. Its FY20 outlook is now in the range of NZ$1.7-1.75 billion, as the company confirms its 3Q20 results were “above expectations”.
The company released its interim FY20 results at the end of February and has since experienced “strong revenue growth” particularly through sales of infant nutrition products sold in China and Australia.
“This primarily reflected the impact of changes in consumer purchase behaviour arising from the COVID-19 situation and included an increase in pantry stocking of our products particularly via online and reseller channels. We are unable to estimate the timing and extent to which pantry stocking may unwind,” a company statement said.
While a2 Milk is weary the outlook for both revenue and earnings remains uncertain during the current COVID-19 pandemic, it is further anticipating a higher EBITDA margin than advised in February, which is now expected to be 31-32 per cent.
Higher revenue from nutritional products, exchange rate movement in USD:NZD impacting on China segment revenue and earnings, as well as lower costs for travel and delay in recruitment due to COVID-19 restrictions are all factors contributing to the new EBITDA margin.
“It is unlikely these factors will be sustained as these unprecedented circumstances begin to unwind,” the company said.
“The board continues to consider it appropriate that the company target an EBITDA margin in the order of 30 per cent in the medium-term.
“This assumes the market performance and mix of our products remains broadly consistent and the competitive environment evolves as anticipated. We will keep the balance between growth and investment under constant review.”
The A2 Milk Company was #26 in Food & Drink Business's Australia's Top 100 Food & Drink Companies 2019 report.
