WELLINGTON, Dec 18 (Reuters) - New Zealand’s a2 Milk Company Ltd upgraded its full-year earnings guidance on Friday on the back of strong sales of its infant formula in Australia and China, sending its shares soaring 27 percent to a record high.
In its second earnings upgrade in as many months, a2 Milk forecast group revenue in the range of NZ$300 ($200.67 million) to $315 million for the 2016 financial year. Group operating earnings before interest, taxes, depreciation and amortisation were pegged in a range of NZ$33 million to NZ$37 million for the 2016 financial year.
“It was a pretty hefty upgrade and it’s all flowing off that a2 premium baby formula,” said Christchurch-based Hamilton Hindin Greene Broker Grant Williamson.
The company’s stock, which has lifted 146 percent so far this year, was trading at NZ$1.40 in midday trade.
A2 Milk’s announcement comes as Australian suppliers struggle to keep up with demand, with reports that Australian produce is being sold at mark-ups as high as 500 percent following previous safety scandals in China over adulterated baby formula.
“The company experienced a significant uplift in sales of infant formula in the month of November, exceeding the sales projected at the time of the previous forecast,” a2 Milk said in a statement.
In an upgrade just a month ago, a2 had forecast group revenue of NZ$285 million and group operating EBITDA of NZ$22 million in the 2016 financial year.
Managing Director & CEO Geoffrey Babidge pointed to Australia, where the infant formula market is “rapidly evolving and experiencing significant growth”.
Babidge said the company increased the supply of its A2 infant formula to customers but continued to experience a run on its stocks in Australia.
Williamson estimated that about 50 percent of supermarket sales of baby formula in Australia were being exported onward to China.
A2 Milk currently operates in Australia, New Zealand, the UK, the United States and China. (Reporting by Rebecca Howard; Editing by Stephen Coates)