The A2 Milk Company Ltd (ASX: A2M) share price rose around 3% after reporting its FY25 result.
A2 Milk is one of the largest infant formula businesses in the Asia Pacific region. It also sells liquid milk and other dairy-related products.
A2 Milk FY25 result
Here are the highlights for the 2025 financial year result:
- Revenue growth of 13.5% to $1.9 billion
- EBITDA (EBITDA explained) grew 17.1% to $274.3 million
- Net profit after tax (NPAT) increased 21.1% to $202.9 million
- Earnings per share increased 20.9% to $0.28
- Final dividend of $0.115 per share
- Full year dividend of $0.20 per share
The business reported that its ANZ segment revenue was flat, with the China and other Asia segment seeing revenue growth of 13.9%, US growth of 22.5% and Mataura Valley Milk (MVM) growth of 42.7%.
Turning to product type, A2 Milk said that total infant formula sales grew by 9.9%, led by English label sales growth of 17.2% with English label market growth. Chinese label sales rose 3.3%, leading to a record Chinese label market share in FY25, despite ongoing market decline.
Liquid milk sales grew 14.4%, with ANZ sales growing 9.9% and USA sales increasing 22.1%. There was growth in its core portfolio and from recent product innovation.
Supply chain update
A2 Mik said it has continued to progress its supply chain transformation strategy.
It has acquired an integrated nutritional manufacturing facility with two CL infant formula product registrations, located in New Zealand for $282 million.
It’s also divesting its ownership of MVM to Open Country Dairy, A2 Milk’s net proceeds being approximately $100 million. A2 Milk expects to recognise an accounting loss on the sale of $130 million.
A2 Milk said it intends to invest around $100 million to increase the capacity and enhance its capability of the new Pokeno site.
The company said it intends to pay a special dividend of $300 million.
It also reaffirmed its ordinary dividend policy of between 60% to 80% of normalised net profit.
Outlook for the A2 Milk share price
The company said it’s going to focus on capturing its full potential in the Chinese market, while expanding into adjacent categories and new markets.
In FY26, with the businesses it’ll own, it expects revenue growth in the high single digits in percentage terms, an EBITDA margin of between 15% to 16% and a net profit similar to FY25.
It’s pleasing to see the business is making good progress in China, and with its revenue and EBITDA. But, if the Chinese market continues to shrink, that is a longer-term headwind. I’m not sure it can continue growing market share forever.
There are other ASX growth shares I’d focus on first.
