Stockpiling Created Strong Boost for NZ-Based Dairy Producer A2

April 21, 2020 Updated: April 22, 2020

A2 Milk has upgraded its full year outlook amid a surge of shoppers stockpiling products during the COVID-19 crisis.

The New Zealand-based dairy producer is among the many food retailers to benefit from panic-buying of essential items as consumers faced lockdown measures to halt the spread of COVID-19.

The dual-listed firm on April 22 said particularly strong sales of infant nutrition products in China and Australia had helped deliver a better-than-expected revenue result for the three months to March 31.

A2 has subsequently upped its full-year core earnings margin to between 31 percent and 32 percent, from the previous range of 29 percent to 30 percent it had forecast in February.

Shares in the company rose by 1.31 percent to $18.55 by 1033 AEST against a 2.1 percent fall for the wider ASX/200.

A2 also reported its overhead costs are tracking lower than previously expected due to travel restrictions and some planned recruitment, particularly in China, being temporarily delayed.

Despite uncertainty from COVID-19, revenue for FY20 is expected to be in the range of $NZ1.7 billion to $NZ1.75 billion ($A1.61 billion to $A1.65 billion), up from $NZ1.3 billion in FY19.

The company did however note it was unlikely the revenue surge will be sustained as the “unprecedented” circumstances begin to unwind.

A2 is one of the few firms to achieve the all-important SAMR regulatory approval in China.

The company’s share price hit an all-time high of $19.23 last week and has climbed about 30 percent in 2020 compared to a 23 percent drop for the wider market.

A2 is still searching for a permanent successor to former chief executive Jayne Hrdlicka, who stepped down in December.

By Alex Druce