The A2 Milk Company Earnings: Sales Growth Despite Market Declines

A2 Milk is outperforming in a declining market. A2 Milk’s total infant formula sales lifted about 2%, despite double-digit declines in both value and volume in the broader Chinese market. The new registration process is proving highly disruptive, and births continue to decline. But we forecast fiscal 2024 revenue growth of about 5% for A2 Milk and expect the company to capture more share as increasing premiumization partially offsets falling births in China. Underlying EBITDA for first half fiscal 2024 rose 5% on the previous corresponding period, or PCP, to NZD 113 million. We maintain our full-year forecast of NZD 231 million EBITDA—about 5% higher than fiscal 2023.