The company, which sells specialized liquid milk and infant formula, now expects group revenue to be in a range of NZ$350 million ($244.16 million) to NZ$360 million versus a prior forecast of NZ$335 million to NZ$350 million given in February. The company is due to report results for the year ending June 30, 2016, in August.
Operating EBITDA will be in a range of NZ$52 million to NZ$54 million, it said, versus a NZ$45 million to NZ$49 million range it forecast in February.
The new forecasts, its fourth revision in the current financial year, come as plunging dairy prices hurt farmer incomes but bolster the earnings of companies that benefit from low ingredients costs.
Dairy giant Fonterra reported a 123 percent jump in its first-half net profit in March helped by demand for its higher-value products, but it continued to pay its farmer shareholders a below break-even price for their milk.
a2 Milk shares were up 13.4 percent at NZ$1.78 in late trading on Wednesday, after hitting the day’s high of NZ$1.87 earlier.
The company produces liquid milk and milk formula containing a protein which some drinkers consider to be easier to digest than regular milk. Key markets for its flagship Platinum infant formula include Australia and China.
a2 Milk said on Wednesday that it continues to perform strongly, despite the fact that China has imposed a series of regulations to tighten supervision of baby formula, requiring producers to register and secure permits to sell their products.
The company sells through online retailers and in shops in China.
The quality of milk and infant formula in China has been a sensitive topic after a series of scandals from 2008 when milk contaminated by the industrial chemical melamine killed at least six children and caused thousands to fall ill.
The higher forecasts and the stock’s inclusion in the S&P/ASX 200 index from next week mean shares have more room to rise, said Macquarie Equities broker Brad Gordon.
«There will be plenty of demand for those shares,» he said.
Source: Reuters
