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New Zealand’s a2 Milk says revenue jumps 70 per cent
July 13, 2018
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WELLINGTON: New Zealand’s a2 Milk Company on Thursday said its annual revenue had jumped nearly 70 per cent, but flagged higher costs in the year ahead as it ramps up its business in the dairy-hungry markets of China.

The firm, one of New Zealand’s largest by market capitalisation, said in a statement to the local stock exchange that its fiscal 2018 unaudited group revenue had grown about 68 per cent to around NZ$922 million ($623 million).

However, its shares fell as much as 2.38 per cent to NZ$11.49, before paring most of those losses to trade 0.3 per cent down on the day at NZ$11.73.

That came as the company said it would have to spend more on marketing as a per centage of sales in the 2019 financial year as well as incurring higher overhead costs due to increasing headcount in China.

“The 2019 financial year outlook and the added expenses have probably put one or two investors off,” said Grant Williamson, investment advisor at Christchurch brokerage Hamilton Hindin Greene.

Chinese buyers purchasing in New Zealand through informal personal shopper channels known as daigou have fanned a2’s stratospheric success in recent years, but competition has been heating up and the company faces the challenge of developing a stronger physical retail presence in China.

A number of firms including Nestle are launching similar infant formula and child-oriented dairy products free from the A1 protein, a tweak a2 Milk says aids digestion compared to traditional milk.

Reuters

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