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Investing.com-- A2 Milk Company Ltd (NZ:ATM) clocked a 21% jump in its annual profit on Monday, aided by strong demand for infant formula in top market China, with the company also announcing the purchase of a new manufacturing facility.
The New Zealand infant milk formula maker posted an annual net profit attributable of NZ$202.9 million, up 21% from last year and also above Reuters estimates of NZ$202.2 million.
Sales grew 13.5% to a record high of NZ$1.90 billion.
Australian and New Zealand shares of the firm rose about 1% in morning trade.
A2 Milk’s robust earnings came chiefly from strong infant formula demand in China, which is the company’s biggest market. Total infant formula sales jumped 10% in the year.
The company forecast flat net profit for the current fiscal year, and said operating margins will improve slightly to between 15% and 16% from 14.4% for fiscal 2025.
A2 Milk said it will buy a nutritional manufacturing facility in New Zealand for NZ$282 million from China Mengniu Dairy.
The facility already has two existing China label product registrations, and is expected to further increase supplies to a2 Milk’s biggest market.
The company also announced plans to divest its 75% stake in Mataura Valley Milk for about NZ$100 million.
A2 Milk declared a final dividend of 11.5 NZ cents per share, and said it could declare a special dividend totalling NZ$300 million if its Mataura sale and its Mengniu acquisition go through.