The balance sheet of a2 Milk Company took a beating in the
year ended June, with the company blaming the high New
Zealand dollar and costs associated with its joint venture in
the United Kingdom.
Revenue was up 17.3% to $111.3 million in the period, from
$94.9 million in the previous corresponding period.
However, the operating profit plunged 86.1% to $720,000 from
$5.2 million in the previous period and the reported profit
fell to $10,000 from $4.1 million. The profit was also hurt
by a reduced amount received from associates, down 63% to
In a six-page filing to the NZX, managing director Geoffrey
Babidge and chairman Cliff Cook barely touched on the
financial result, instead focusing on the future.
The appreciation of the kiwi to the Australian dollar reduced
revenue by about $14 millon and operating earnings by about
$2.7 million on the previous period. The trading result
included:Operating profit before licence fees for the
Australian market of $18.7 million.
Operating loss for the United Kingdom and China markets of
Employee share scheme expenses (non cash) of $1.2 million.
Other corporate costs of $6.8 million.
Income tax charge of $710,000.
Mr Babidge said the continued strong performance in Australia
funded the development of the growth in China and the UK,
consistent with the strategic agenda and the supporting
The board continued to be pleased with the performance of the
Australian business and its potential for further growth and
it remained confident in the plans for Asia and the UK.
Slower build in distribution and awareness, rather than the
core a2 Milk product proposition, contributed to slower
revenue growth in China and the UK markets.
The potential for growth remained significant, he said.
''The company has progressed its planning for its fourth
global growth initiative - the launch of a2 Milk into the
United States fresh milk market starting during calendar
Advances in the science concerning the benefits of dairy
products free from A1 beta casein protein had been reported
in international publications in during the past year, Mr
They supported the position that a2 Milk made dairy nutrition
accessible to many consumers who limited or avoided their
intake of dairy.
In addition, a2 Milk Company's research and development
programme continued to improve efficiencies in proprietary
process and had contributed to the filing of additional
''The company has made significant progress in developing a
new global brand vision which will be progressively
implemented during the coming year.''