a2 Milk shares (ASX:A2M) ended the day at the high of A$8.23, up 3.13% after the company reported a 13.5% rise in group revenue to NZ$1,902 million for FY25. The company’s performance was underscored by a maiden dividend declaration, as well as a China expansion that sending positive signals to the markets.
The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 17.1% to NZ$274.3 million, with the EBITDA margin improving slightly to 14.4%. Net profit after tax (NPAT) climbed 21.1% to NZ$202.9 million, and basic earnings per share rose 20.9% to 28.0 cents.
A significant milestone for A2 Milk is the declaration of its first-ever full-year dividend of 20.0 NZ cents per share, including a final dividend of 11.5 cents. This decision reflects management’s confidence in the company’s sustainable profitability and strong cash flow generation. The company’s net cash position strengthened to NZ$1,061.2 million.
A2 Milk’s performance was particularly strong in China & Other Asia, where revenue increased by 13.9%. English label infant milk formula (IMF) sales soared 17.2% despite challenging market conditions. The USA segment also delivered impressive growth, with revenue up 22.5% and narrowing operating losses. While the Australia and New Zealand segment was flat overall, it experienced solid growth in liquid milk sales.
To further strengthen its position in the crucial China market, A2 Milk announced plans to acquire Yashili New Zealand, a manufacturing facility in Pokeno. The facility has two existing China-label product registrations, which are expected to improve A2 Milk’s market access in the NZ$23 billion China-label IMF market.
Top Australian Brokers
- Pepperstone - Top Australian broker - Read our review
- eToro - Invest in ASX and international shares - Read our review
Conversely, A2 Milk intends to sell its 75% stake in Mataura Valley Milk for approximately NZ$100 million, incurring a NZ$130 million loss. Following the completion of these transactions, the board plans to declare a special dividend of NZ$300 million, further rewarding shareholders.
The company also focused on product innovation, launching a premium English label infant formula (a2 Genesis™) and fortified milk powders for kids and seniors in China. A2 Milk also emphasized its commitment to sustainability, achieving 98% recyclable packaging and a significant reduction in Scope 1 emissions.
Looking ahead, A2 Milk expects interest income to be lower in FY26 due to market rates and net transaction cash outflows. NPAT for FY26 is projected to be similar to FY25, around NZ$203 million. Cash conversion is forecast in the range of 80%-90%, with capital expenditure planned for NZ$50-70 million.
Don’t Buy Just Yet
You will want to see this before you make any decisions.
Before you decide which shares to add to your portfolio you might want to take a look at this special report we recently published.
Our experts picked out The 5 best ASX shares to buy in 2025.
We’re giving away this valuable research for FREE.
Click below to secure your copy
