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A2 Milk lifts revenue predictions

NZN 14/06/2016 Jonathan Underhill

A2 Milk has raised its guidance for full-year sales and earnings, saying trading is exceeding its targets and the milk marketing company is well placed to cope with changes to regulations for infant formula in China.

Revenue is forecast to be in a range of $350 million to $360m in the year ending June 30, from a previous forecast of $335m to $350m. Operating earnings before interest, tax, depreciation and amortisation are projected to be $52m to $54m, up from the $45m-to-$49m range it gave with its first-half results in February.

The improved guidance is dependent on recent trading conditions continuing and no material change in market conditions, the company said in a statement.

A2 was well placed to cope with changes to infant formula regulations in China announced in recent months, it said.

It also believed it was alert and able to respond to future changes, it said.

As a result, it continued to perform strongly compared to its plan in the second half of FY16," A2 said.

The company also expects its balance sheet to be stronger by year-end, reflecting improved operating cash flow in the second half with cash on hand likely to exceed $50m.

Shares of A2 have soared 170 per cent in the past 12 months, although year-to-date they are down about 16 per cent and last traded at $1.57.

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