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A2 Milk bosses sell down holdings

NZ Newswire logoNZ Newswire 22/02/2017 Sophie Boot

A2 Milk Co's chief executive and chair have sold down their stakes in the milk marketing firm, less than a week after reporting first-half profit more than tripled as demand for its A2 Platinum infant formula surged in its key Australia, New Zealand and China businesses.

Chair David Hearn sold 1 million shares for about $2.5 million, or $2.48 a share, on Friday, while chief executive Geoffrey Babidge sold 900,000 shares for $2.2m, or an average price of $2.49, on Tuesday.

Mr Hearn gained the shares by exercising 1 million of his 5 million options, for which he paid $630,000, with the sale to facilitate a property transaction in the UK to move his personal residence, according to documents published to the NZX.

Last week, the milk marketer reported net profit soared to $39.4m in the six months ended December 31, 2016, from $10.1m in the year-earlier period, while revenue rose 84 per cent to $256.1m.

The shares, which are notoriously volatile, had rallied to a record $2.60 in the lead-up to earnings being reported, slipped 1 cent to $2.57 after the results, and have continued to decline since. They traded at $2.51 on Friday, when Hearn sold his shares, $2.44 on Tuesday, and are down 4.1 per cent on Wednesday to $2.34.

A2's shares have bounced around in the past quarter, dragged down from a then-record $2.58 in December when ASX-listed rival Bellamy's was put in a trading halt, causing investors concern that there might be sector-wide issues.

Bellamy's ran into trouble after China moved to tighten regulations in a bid to crack down on the grey market - or 'daigou' - sales and allay concerns about food safety.

The company says it has a considerable growth opportunity in China and is using multiple channels, including cross-border e-retailers, to sell into that market, while monitoring Chinese regulation of infant formula and cross-border trade.

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