A2 Milk turns to annual loss on increased costs
The company has invested in offshore expansion and absorbed costs from its ASX listing.
The company has invested in offshore expansion and absorbed costs from its ASX listing.
See also: A2 Milk burns through cash as takeover talks stall
Specialty milk company, A2 Milk [NZX: ATM], has reported an annual loss despite a hike in revenue.
The Auckland-based company has invested in offshore expansion and absorbed costs from its ASX listing.
The net loss after tax was $2.09 million for the year ended June 30, compared to a $10,000 profit the year earlier.
Revenue rose 40% to $155 million, while earnings before interest, tax, depreciation, amortisation and one-time costs rose 35% to $4.18 million, following a record performance in Australia and New Zealand. Non-recurring ASX listing costs were $1.68 million.
Managing director Geoffrey Babidge says the company's growth initiatives are continuing to progress, with the results evident in this year's trading results.
"The Australian business continued to perform strongly and returned a record result for the region. The growth in A2 Platinum infant formula in Australia and New Zealand and China was exceptional and provides a potentially significant earnings contributor for the future," he says.
Within two years of launch, infant formula has become 27% of total turnover, achieving revenue of $41.7 million in Australia, New Zealand and China during the year.
The company is pleased with the start of sales in the US milk market and the repositioning during the year of its product in the UK market.
On the basis of this year's performance and assuming trends in infant formula are sustained, the company expects 2016 revenue to increase 72%to $267 million, and ebitda to increase 150% to $12 million.
There has been no word from Australian-based Freedom Foods and US-based Dean Foods since their expression of interest in taking over the company, which was rejected by the board.
"We have had no further communication with either Freedom Foods Group or Dean Foods since we advised that the proposal in the expression of interest was not compelling," Mr Babidge says.
A2 deferred a planned June capital raising following the expression of interest.
Freedom Foods, which is effectively controlled by the Perich family, which is major supplier of A2 milk, holds a 19.1% blocking stake.
The company's shares slipped 2.6% to 75c, and have gained 33%t so far this year. Analysts covering the stock have target prices of $1 and more.
(BusinessDesk)