The a2 Milk Company (ATM) H2 2024 earnings summary

Executive summary

• Achieved strong FY24 results with revenue up 5.2% to NZD 1.68 billion, EBITDA up 6.9%, and EPS up 9.2%, despite challenging market conditions, particularly in China.

• Secured top-5 brand position in China IMF market, growing total IMF sales and achieving record China label market share, even as the market declined double digits.

• Stabilized English label IMF sales, returning to growth in 2H24 after prior declines.

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

• Advanced sustainability initiatives, including electrification of MVM's boiler, reducing Scope 1 and 2 emissions by 45%.

Financial highlights

• Net profit after tax rose 7.7% to NZD 168 million, with EBITDA up 6.9% to NZD 234 million and a margin of 14%.

• Gross margin was 45.8%, down 0.6 percentage points 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 revenue grew 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%.

Outlook and guidance

• FY25 revenue expected to grow mid-single digit percent, with growth affected by IMF supply constraints in 1H25.

• Gross and EBITDA margins expected to be broadly similar to FY24, with 1H25 down and 2H25 up.

• Operational cash conversion expected to be less than 100% due to Synlait settlement; CapEx around NZD 20 million.

• Continued focus on China market, new product launches, and supply chain transformation.