(Feb 16): Infant formula distributor a2 Milk Co’s chief executive officer David Bortolussi said the market has underestimated the resilience of the industry after strengthening sales in China boosted earnings.
Net income from continuing operations rose 9.4% from a year earlier to NZ$112.1 million (US$68 million, or RM85.78 million) in the six months through December, a2 said Monday in Wellington. Revenue jumped 19% to NZ$993 million and the company raised its full-year forecast to a mid double-digit percentage increase from a low double-digit gain.
“Our upgraded outlook means we are now on track to achieve our NZ$2 billion medium-term sales ambition in FY2026, a full year ahead of plan,” Bortolussi said in a statement. “Infant milk formula remains central to our growth strategy and continues to outperform the China market.”
The stock rose to its highest since February 2021 before paring some of those gains to trade up 3.4% as of 4:35pm in Wellington.
The rally comes after the firm’s shares plunged in January on news that China’s birth rate had fallen to its lowest since the forming of the People’s Republic in 1949.
The infant formula industry in China has been underestimated, Bortolussi said in an interview.
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“There’s still a huge market,” he said. “We still have a significant growth opportunity or share opportunity within that.”
Sales to its core China base advanced, boosted by increased birth rates in 2024, allowing the company to increase market share. While there were fewer newborns in 2025, that trend is expected to reverse, reflecting a recovery in marriage rates and a greater government focus on birth rate stabilisation, Bortolussi said.
While Bortolussi said expected infant formula demand to be “relatively flat in the years ahead,” he said he saw great opportunities for a2 to boost its market share, especially in the China-label segment.
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That sector makes up 80% of the total China infant formula market, but a2 Milk currently has just over 5%, Bortolussi said. The company was looking to increase its portfolio to potentially as many as four products following the recent acquisition of the a2 Pokeno facility to better tap that segment, he said.
First-half operating earnings improved 18%, while the earnings margin was little changed at 15.6%, the company said. The full-year margin is projected to be 15.5% to 16%.
A2 also reiterated its intention to pay a NZ$300 million special dividend, subject to regulatory approvals being received for amendments to two infant formula product registrations in China. The amendment process is progressing well, a2 said.
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