The New Zealand based A2 Milk Company (ASX:A2M) released its full FY15 results to the ASX, reporting increases in total revenue, however experiencing net losses due to public listing costs and employee share schemes.
The company’s total revenue came in $155.1 million, up 40 per cent on the previous corresponding period (pcp). A net loss after tax of $2.09 million was reported, after the company faced significant costs associated with listing on the ASX and employee share scheme expenses, neither of which is tax deductable.
The company’s operating EBITDA came in at $4.8 million before non-recurring costs, up 25 per cent on the previous year. This is a record performance in Australia and New Zealand. The a2 Platinum milk infant formula experienced significant growth in the New Zealand and Chinese market, providing revenue of $41.67 million, up 445 per cent on the pcp. Australian fresh milk sales also increased, gaining 10 per cent on the previous year. International growth continues to look promising as the company launched a2 milk into the USA and repositioned itself into the specialty milk segment in the UK.
A2 Managing Director, Geoffrey Babidge commented, “The Company’s growth initiatives continue to progress in a very positive manner and the results of this are now evident in the FY15 trading results. The Australian business continued to perform very strongly and returned a record result for the region. The growth in a2 Platinum infant formula in ANZ and China was exceptional and provides a potentially significant earnings contributor for the future, We were also pleased with the commencement of sales activities in the USA milk market and repositioning our product offering in the UK market.”
Going forward the company forecasts strong growth in both revenue and operating earnings in FY16. Guidance for FY16 Group revenue is $267 million, up 72 per cent on FY15 results and Group EBITDA of $12 million, up 150 per cent on FY15 results.
Following the potential acquisition of A2 Milk in June, the company’s share price gained significantly. There has been no developments since the initial expression of interest and as a result the company’s share price has travelled sideways. The reported net loss will come as no surprise to most investors, however the growth in infant formula sales will boost forecasted earnings and will likely push the share price into higher ground.
Author: Ben Visser
Aug 20, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.