New Zealand eyes have been so focussed this week on an event 20,000kms distant that they might not have noticed here at home another extraordinary event, taking place on the NZX.
The market capitalisation of a company which listed as recently as 2012 on the local sharemarket soared past the $12bn mark and is hard on the heels of Meridian Energy, which has the highest valuation of NZ-based companies on the NZX at $12.3bn.
The challenger is a2 Milk, which sells a specialised type of milk with what it claims are health benefits.
A2 has had a chequered history but its market valuation keeps climbing, racing ahead of blue chips like Auckland International Airport and Fisher & Paykel Healthcare and leaving in its dust some one-time market darlings like Fletcher Buildings (market cap $4.3bn) and Spark ($7.2bn). Continue reading “Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star”
The contrasting fortunes of Fonterra and A2 Milk came into the spotlight this week, after the latter reported a startling 55% rise in half-year net profit to $152m. Fonterra shareholders will be ruefelly recalling their company’s performance last year when it reported its first-ever net loss of $196m.
A2 Milk shareholders are marching to a very different tune. Despite one market analyst reckoning its shareprice had become over-priced, buyers pushed it up by more than a dollar to $13.95 as they absorbed news of strong sales growth in all key product segments – infant formula, liquid milk and milk powders.
Sales of infant formula totalled $495.5m for the half – a 45.3% increase on the previous half, driven by share gains in China and Australia.
The company is accelerating its investment in building brand equity through enhanced marketing campaigns in its key markets of China, US and Australia, alongside continued investments in R&D and further development of its intellectual property. Continue reading “Grass on the A2 side of the dairy fence is looking greener – and the profits plusher”
The contrasting fortunes of key components of the NZ dairy industry were thrown into stark relief this week. While the NZX market darling A2 Milk was reporting record revenue of $368.4m in the first four months of the financial year, up 40.5% on the same period last year, dairy product prices were falling at the Global Dairy Trade auction, prompting analysts to reinforce predictions Fonterra would again have to cut its forecast for this season’s milk payout.
Fonterra, which started the season with a $7kg/MS forecast payout, has since lowered that to the $6.25-$6.50 range. Analysts are now pointing to the prospect of this further falling to a $5.80-$6 range in the wake of the latest slide in price at the GDT, where the falls in butter and anhydrous milkfat were the biggest in two years and the overall price index dropped 3.5% from the previous auction.
For A2 Milk, the positive result comes after last year’s record revenue of $922m and the profit after tax more than doubling to $195m. Continue reading “Someone in the dairy business has been creaming it – check out A2 Milk’s results”
It’s a critical week for the country’s largest company, Fonterra, which has to find a new direction after shipping out its chief executive, Theo Spierings, writing off more than $1.5bn from its balance sheet, and posting its first loss in its 17-year history.
Meanwhile, back on the farm, Fonterra’s suppliers are absorbing payout downgrades as well as a slump in dairy farm prices. At the same time they are seeing the valuations of other companies in the dairy industry—notably A2 Milk and Synlait— soaring on the NZ sharemarket.
So they’ll be looking to Fonterra’s leaders for some fresh ideas on how to turnaround the fortunes of the big co-op. Continue reading “Why Fonterra’s farmers should be wondering what the Irish can teach us”
Revenue up 68%, profit up 116% , cash on hand up 280% …
Those annual results are the sort most companies’ bosses dream of. They are certainly are the kind of results Fonterra’s farmer-suppliers are not likely to hear from the co-op’s board in this lifetime.
But for A2 Milk’s shareholders they are real. Reporting to shareholders (who indeed have had a dream run this year), the company this week said revenue reached $922.7m, annual profit $195.7m, and the sales margin was 31%, up from 26%
Other key statistics included strong cash conversion with operating cash flow of $231.1m – up 131%, and basic earnings per share of 27c – up from 12.7c. Continue reading “A2 Milk reports an a1 result while scientists work on the health benefits”
Fonterra is “humming” in China, according to a headline in the NZ Herald, although the text of the article beneath it mentioned the “woes” associated with the co-op’s investment in Beingmate.
The co-op is having to absorb an impairment of $405m on the value of its 18.8% holding in Beingmate. On top of the $183m payment it has had to make French giant Danone, the writedown takes the gloss off that otherwise “humming” performance.
Some of its farmer-shareholders may be looking over the fence to the rather different outcome for A2 Milk, which lifted its annual sales 68% in the June year, with revenue rising from $549m in the June 2017 year to $922m. During the latest year A2 Milk achieved gross margins up to 49%. Continue reading “Beingmate has muted Fonterra’s Chinese hum”
“We’ve kinda got to what they might call ‘peak cow’” . That’s how Primary Industries Minister Damien O’Connor put it, when Corin Dann interviewed him on Q&A. He went on:
“We’re giving clear signals that if growth is going to continue it will be growth and value from what they do, not just getting more from the land, with the environmental impacts of that”.
To some people, the phrase ‘peak cow’ sounds like it comes from the lexicology of the Green Party, which for long enough cried wolf about ‘peak oil’, only for oil producers to keep the stuff coming out of the ground in ever-increasing volumes. Continue reading “If we must come down from Peak Cow, let’s be careful about the regulatory path we take”