a2 Milk Co. benefits from pandemic

Date: 22.04.2020Source: a2 Milk Company

a2 Milk Company said that since late February at the release of its interim results, a2 Milk has continued to experience strong revenue growth across all key regions, particularly in infant nutrition products sold in key markets of China and Australia.

“This primarily reflected the impact of changes in consumer purchase behaviour arising from the COVID-19 situation and included an increase in pantry stocking of our products particularly via online and reseller channels. We are unable to estimate the timing and extent to which pantry stocking may unwind”, a2 said in a statement.

Management added that the China business unit is also benefiting from currency translation benefits due to the depreciation of the New Zealand dollar against the US dollar. While most companies are making downgrades due to the uncertain outlook, a2 Milk is on track for as much as a 35 per cent gain in earnings before interest, taxes, depreciation, and amortisation (EBITDA) in fiscal 2020.

a2 Milk is one of the few companies which has been a beneficiary of COVID-19. But a2 Milk warned that given the COVID-19 situation, the outlook for both revenue and earnings remains uncertain, and there is significant uncertainty around the potential impact on supply chains and consumer demand in core markets for the balance of the financial year.

Revenue for the year is tipped to to be in the range of $NZ1.7 billion to $NZ1.75 billion. while the EBITDA (earnings before interest tax depreciation and amortisation) margin is now anticipated to be above prior estimates in the range of 31 per cent to 32 per cent.

Roland Sossna / moproweb

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