Upward trajectory for A2 Milk continues

The a2 Milk Company has upgraded its 2016 earnings expectations for the third time in six months on the back of strong demand from China.

 

The company is forecasting its revenue to be in the range of $350 million to $360 million and its operating EBITDA in the range of $52 million to $54 million for the 2016 financial year.

 

The last update, issued in February, took into account the risks relating to potential changes in infant formula regulations. At the time a2 Milk said it was forecasting revenue of $335 million to $350 million and operating EBITDA of $45 million to $49 million.

 

Since then, the company said, a number of changes to the infant formula regulatory environment in the China market have been announced.

 

These include taxation of Cross-Border E-Commerce (CBEC) Traded Commodities, publication of product lists for CBEC traded commodities through China free trade zones and, more recently, an Infant Formula Registration Rule for both domestic and imported infant formula products into China.

 

a2 Milk said it continues to adjust and evolve its manufacturing and distribution model in response to such changes, and is “alert and well placed to respond to other potential changes in the regulatory environment”.

 

The company also noted that it will be added to the S&P/ASX 200 index after the close of trading on 17 June.