The a2 Milk Company (ATM) H2 2024 earnings summary

Executive summary

• Achieved revenue growth of 5.2% to NZD 1.68 billion, with EBITDA up 6.9% and EPS up 9.2% year-over-year.

• Became a top five China IMF brand, growing total IMF sales and achieving record market share despite a double-digit market decline.

• Resolved Synlait arbitration disputes, improving supply chain certainty and flexibility, subject to Synlait's equity raise and refinancing.

• Stabilized English label IMF sales with growth in the second half after prior declines.

• Achieved strong sales growth during a major China label IMF product transition.

Financial highlights

• Net profit after tax rose 7.7% to NZD 168 million, with EBITDA margin at 14% and gross margin at 45.8% (down 0.6ppts due to higher input costs and accelerated depreciation).

• Net cash increased to NZD 969 million, up NZD 212 million from June 2023, with operational cash conversion at 126%.

• China & Other Asia segment sales up 14.1%, USA up 8.2%, ANZ down 14.6%, and MVM external sales down 11%.

• Total IMF sales up 4.6%, with China label up 9.5% and English label down 0.3%.

• Marketing investment increased to NZD 280 million, focused on China and product launches.

Outlook and guidance

• Expects mid-single digit revenue growth in FY 2025, with growth affected by IMF supply constraints in the first half, expected to be resolved in 1H25.

• Gross and EBITDA margins expected to be broadly similar to FY 2024, with first half down due to air freight and second half up.

• Operational cash conversion expected to be less than 100% due to Synlait settlement and payment term changes.

• Capital expenditure planned at approximately NZD 20 million.