The a2 Milk Company, a specialty dairy brand from New Zealand, will pay its first-ever dividend, projecting significant revenue growth and strong financial performance in FY24.
The a2 Milk Company, a prominent New Zealand-based producer of specialty milk and infant formula, has announced its first-ever dividend payout, marking a significant milestone in its operational journey. The company, known for its innovative dairy products that claim easier digestion due to the absence of A1 beta-casein protein, is also projecting high single-digit revenue growth for the fiscal year.
The announcement came as the company reported that sales of its infant milk formula and liquid milk surpassed previous forecasts, building on last year’s revenue of $1.67 billion. The underlying profit margin as a percentage of revenue is expected to be around 14%, an improvement compared to last year’s profit of $234.3 million.
Board chair Pip Greenwood shared the news during the company’s annual meeting, emphasizing a2 Milk’s progress in strengthening its business model and creating resilience.
Given this progress and our strong balance sheet position, the board believes the time is right to introduce a dividend policy that delivers sustainable cash returns to shareholders over time.”
Pip Greenwood, The a2 Milk Company
The interim dividend will be issued for the first half ending December 2024, with future payouts planned semi-annually in February and August. The policy aims to distribute between 60% and 80% of the company’s net profit after tax, excluding non-recurring items.
As of 30 June 2024, the company held a robust cash reserve of $969 million, despite never having paid a dividend before. Greenwood noted that the board remains committed to exploring additional capital management strategies, including special dividends, as the company’s risk profile evolves.
The a2 Milk Company is also actively pursuing opportunities to expand its footprint in China through additional label registrations and exploring options for developing its nutritional manufacturing capabilities, potentially via acquisitions or commercial partnerships.
Greenwood reiterated that these efforts remain a top priority for the company’s leadership, underlining their importance for long-term growth and shareholder value.