New Zealand’s a2 Milk lifts full-year forecasts on demand from China

Source:Reuters Published: 2016/6/15 21:48:01

New Zealand dairy company a2 Milk raised its full-year revenue and profit forecasts on Wednesday as demand from China remains strong.

The company, which sells specialized liquid milk and infant formula, now expects its revenue to be in a range of NZ$350 million ($244.16 million) to NZ$360 million compared with a prior forecast of NZ$335 million to NZ$350 million given in February. The company is due to report in August results for the year ending June 30.

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.

Key markets for its flagship Platinum infant formula include Australia and China.

A2 Milk said on Wednesday that it continues to perform strongly, even though China has imposed 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.

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