The a2 Milk Company (ATM) H2 2024 earnings summary

Executive summary

• Achieved strong FY24 results with revenue up 5.2% to $1,675.5 million, EBITDA up 6.9% to $234.3 million, and EPS up 9.2%, with net profit after tax rising 7.7% to $167.6 million, despite challenging market conditions.

• Secured top-5 brand position in China IMF, growing total IMF sales by 4.6% and China label IMF by 9.5%, 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 completion of Synlait's equity raise and refinancing.

• Advanced sustainability initiatives, reducing Scope 1 and 2 greenhouse gas emissions by 45% at MVM.

Financial highlights

• Revenue reached $1,675.5 million (+5.2% year-over-year), driven by China & Other Asia segment up 14.1%, while ANZ was down 14.6%.

• EBITDA was $234.3 million (margin 14.0%), net cash increased to $968.9 million (+28%), and operational cash conversion was 126%.

• Gross margin was 45.8%, down 0.6pp due to higher input costs and accelerated depreciation; excluding this, margin was flat.

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

• Other nutritionals sales grew 36.7%, liquid milk up 3.3% in ANZ and 7.4% in the US.

Outlook and guidance

• FY25 revenue expected to grow mid-single digits, with supply constraints in H1 and resolution expected in H2.

• Gross and EBITDA margins expected to be similar to FY24; CapEx around $20 million.

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

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