The a2Milk Company’s (a2MC) focus on the China market has delivered a strong 1H24 with 3.7 per cent revenue growth to NZ$812 million (all figures in NZ dollars).
Snapshot
- EBITDA: up 5% to $113.2m
- NPAT: up 15.6% to $85.3m
- EPS (earnings per share): up 18.6% to 11.8 cents
The company’s 16.5 per cent growth in its China & Other Asia market was offset by a 24 per cent decline in the ANZ segment due to shifting English label IMF to China segment. US revenue was up 8.6 per cent.
In the China market, the company recorded total infant milk formula (IMF) sales growth of 1.5 per cent, despite changing and challenging conditions.
The overall China IMF market declined 10.7 per cent in volume and 13.6 per cent in value in 1H24. The decline is attributed to the cumulative decrease in newborns (nine million newborns in 2023), transition to products formulated under new GB standards, and macroeconomic conditions.
China label IMF market value was down 15.2 per cent.
“Across China label channels, there was significant pricing pressure impacted by the combination of volume pressure resulting from fewer newborns, market-wide transition to new GB registered products with clearance of old GB registered products, and macroeconomic conditions. The China label market value decline also led to a significant number of mother and baby store closures,” the company said.
Its market share in China label IMF channels is 3.5 per cent in mother and baby stores and 3.6 per cent in domestic online retail channels. The company said this saw it being a top-5 share gainer in the China table market and top-5 brand overall including English label.
A2MC launched an upgraded version of its China label IMF that was formulated in line with China’s new GB standard and stabilised English label IMF sales.
After a number of years of “significant” decline, the English label market outperformed the overall market and stabilised in 1H. The value was down 0.1 per cent, but the proportion of market share grew 1.9 per cent to 16.3 per cent.
“Market dynamics and the new GB registration process have led to increasing brand concentration within the China IMF market with the top-5 brands now representing over 50 per cent of market value.
“In the context of challenging macroeconomic and IMF market conditions, a2MC’s growth in 1H24 in China label IMF of 10.4 per cent, and total IMF of 1.5 per cent reflected a strong performance overall,” the company said.
