In the face of the haze of the epidemic, the senior management of A2 milk company (hereinafter referred to as A2 milk) still said that they were “full of confidence” in the business fundamentals. This morning, the New Zealand milk powder company released its semi annual report for fiscal year 2021 (six months to December 31, 2020), which showed that the total revenue during the period was NZ $677.4 million (about RMB 3.253 billion), a year-on-year decrease of 16.0%, and the profit before tax, interest, depreciation and amortization was NZ $178.5 million (about RMB 857 million), a year-on-year decrease of 32.2%.
Like foreign counterparts such as Danone and Mead Johnson, A2 milk mentioned in its performance analysis that the challenges come from the interruption of purchasing / distribution channels caused by the epidemic, as well as the impact on cross-border e-commerce channels. However, the company has plans to reactivate these channels.
Xiaoshidai noted that in the Chinese market, the performance of A2 milk is still remarkable, and its Chinese label infant formula “A2 to early” and fresh milk business have achieved substantial growth during the period. Now, let’s take a look.
According to the A2 milk announcement, during the reporting period, the revenue of China and other Asian markets was NZ $326 million (about RMB 1565 million), an increase of 2.8%; the profit before tax, interest, depreciation and amortization fell to NZ $94.4 million (about RMB 453 million).
“This reflects continued investment in capacity and low gross margins. China and other Asian markets also have a certain proportion of inventory provision. ” The announcement said. Let’s look at the Chinese market in detail. In the infant nutrition sector, the announcement showed that the company’s sales of Chinese label infant formula milk powder during the “A2 to early” period was 231.1 million New Zealand dollars (about 1.023 billion yuan), an increase of 45.2% over the same period last year.
In addition, in cross-border e-commerce channels closely related to the Chinese market, A2 milk said that sales of infant nutrition products with A2 platinum English and other labels dropped to NZ $103.5 million (about RMB 497 million). When it comes to the reasons for the decline, the company said that the sales volume of informal social e-commerce channels and dealers was low.
Looking back on China’s infant milk powder market last year, A2 milk pointed out in the announcement that the overall sales growth of China’s infant nutrition market was basically flat due to destocking, interruption (such as channels) caused by epidemic situation and birth rate. Overall, this market is showing moderate value growth, driven by continued high-end. At the same time, because local manufacturers continue to compete with traditional foreign brands for share, the market competition is also intensifying.
“Full of confidence
Looking ahead to the 2021 fiscal year, A2 milk said that due to the epidemic, the uncertainty and volatility of the global market are still at an unprecedented level. However, the company is “still confident” in business fundamentals and will continue to invest in the brand and its ability to drive long-term growth. For example, in terms of capacity investment, the company is promoting the acquisition of Matola milk powder factory. According to xiaoshidai, the company has announced that it plans to acquire the Matola milk powder factory of China animal husbandry group in New Zealand, with a total consideration of about NZ $270 million (about RMB 1.297 billion). The deal is expected to be completed around the end of May 2021. It is worth noting that A2 milk disclosed in its announcement today that over time, the proposed acquisition will provide a way to make profits and provide greater flexibility for product supply. These possibilities include seeking to register additional Chinese label products and more innovation opportunities.
Matola milk powder factory