Shares in the a2 Milk company have rocketed higher - again - after the company unveiled a 138 per cent increase in net profit to $NZ52.3 million ($47.4 million) for the first four months of fiscal 2018.
The Australian and New Zealand-listed company announced a series of positive results to the market during its annual general meeting in Auckland on Tuesday, and revealed it was investigating expanding the distribution of its fresh milk into more American states.
A2 Milk shares rose 39??, or 5.5 per cent, to $7.46, within striking distance of its record closing price of $7.76 reached last month.
The infant formula and fresh milk company told shareholders that revenue for the four months to the end of October was $NZ262.2 million, up 69 per cent on the same period last year. Earnings before interest, tax, depreciation and amortisation was $NZ78.4 million, up 121 per cent on the same period last financial year.
A2 Milk has been one of the best-performed stocks on the ASX this year. In early January, shares in a2 Milk closed as low as $1.96. In the months since, they have jumped by about 280 per cent.
The stock prices of other infant formula companies have also surged this year, including Bellamy's Organic and smaller players like Bubs Australia and Wattle Health Australia.
A2 Milk's chairman, David Hearn, told shareholders that the company had recorded "large increases in revenue, earnings and cash flow" in fiscal 2017.
"The platform the company has now built not only provides a strong base from which to grow further into new nutritional categories and markets, but also, I am pleased to report, shows signs of further strengthening," he said.
"Based on this strong trajectory, the board continues to believe that there is significant potential for further growth in our priority markets in Australia, China, the United States and the United Kingdom."
A2 told shareholders that its infant formula was now in more than 5800 China Mother and Baby stores, and that "further expansion remains a key focus".
Peter Nathan, the chief executive of a2 Milk Asia Pacific, said the strong financial update represented a continuation of the company's growth strategy.
"We're doing the same things so the strategy is clearly working," he said.
"It's on the back of the continuation of our successful penetration of the infant formula market both in Australia and China, as we continue to grow profitably in that very large market segment. The fact that we're now gaining some strong traction in the US is also helping us, so we're getting some further diversification in our business."
Asked about the company's prospects for the rest of fiscal 2018, Mr Nathan said: "We're very positive about our growth prospects for the remainder of the financial year. We've invested heavily in our brand, we'll continue to invest heavily in our brand to extract further growth."
