A2 profitable for the first time, eyes up Asia

A2 profitable for the first time, eyes up Asia

Feb. 16 (BusinessDesk) - A2 Corp., which tapped AMP Capital Investors NZ and Freedom Foods Group in a share purchase plan last year, made its first-ever profit and is looking towards Asia for further growth.

The Auckland-based company reported a net profit $894,000, or 17 cents a share, in the six months to Dec. 31, turning around a loss of $717,000, or 19 cents, in the same period a year ago. Revenue for the period rose to $19.3 million from $249,000 in the previous year, almost entirely from its Australian operations. Earnings across the Tasman rose 20%, and were driven by a change in business model over the past two years towards producing a dairy product away from collecting royalties on third parties producing milk containing the A2 type of beta casein protein.

“Our immediate aims are to continue to expand in Australia and New Zealand, to enter new dairy beverage markets with partners, and to supply powder and infant formula sourced locally, initially into Asia,” managing director Geoffrey Babidge said in a statement. “Positive earnings from Australian sales will assist us to fund growth in new markets.”

In October the company bought the 50% of the A2 Dairy Products Australia Pty Ltd. it did not already own, and has subsequently commissioned an A$7.5 million facility in Sydney to boost processing and packaging capacity in Australia. The plant was funded by an equity raising of $3.9 million through cornerstone investors AMP Capital and Freedom Foods.

The company also expanded into North America in the period, buying out the remainder of U.S.-joint venture A2 Milk Company LLC, with the transaction being funded through an ownership-for-shares swap with former partner Idea Sphere Inc.

The company said no dividend would be payable for the period.

The shares were unchanged on the NZAX today at 13.5 cents, and last traded on Feb. 10, having pared gains after hitting a 2-1/2 year high earlier this month.

(BusinessDesk)

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