A2 Milk to Issue First-Ever Dividend as Revenue Growth Accelerates
Source: DairyNews.today
Dairy company a2 Milk announced its inaugural dividend payout, underpinned by strong financial performance and robust revenue growth. The company expects high single-digit full-year revenue growth, with sales of infant formula and liquid milk slightly exceeding prior guidance.
Revenue for the current fiscal year is projected to surpass the $1.67 billion recorded last year. Underlying profit is expected to be approximately 14% of revenue, compared to last year’s $234.3 million, with stronger performance in the second half.
Dividend Policy Introduced
In a milestone move, a2 Milk will pay an interim dividend for the first half ending December, marking the implementation of its new dividend policy. Future dividends are planned on a semi-annual basis, in February and August, with a target payout ratio of 60% to 80% of net profit after tax, excluding non-recurring items.
“Given our progress and strong balance sheet, the board believes this is the right time to introduce a sustainable dividend policy,” said Pip Greenwood, Chair of a2 Milk’s board, at the company’s annual meeting on Friday.
The company reported a robust cash balance of $969 million as of June 30, 2024, despite having never paid a dividend in the past.
Strategic Investments and China Expansion
Greenwood highlighted a2 Milk’s ongoing efforts to expand its China label registrations and develop its nutritional manufacturing capabilities. She noted that these goals could be achieved through acquisitions or commercial partnerships, although specific updates were not provided.
“This remains a top priority for management and the board, and we are making steady progress,” Greenwood said.
The board also indicated its commitment to evaluating capital management options, including potential special dividends, as the company executes its strategy and assesses evolving risks.
A2 Milk’s decision to pay dividends reflects its confidence in sustained growth and financial stability. As the company focuses on bolstering its market presence and operational resilience, shareholders can anticipate more consistent returns in the future.
Dividend Policy Introduced
In a milestone move, a2 Milk will pay an interim dividend for the first half ending December, marking the implementation of its new dividend policy. Future dividends are planned on a semi-annual basis, in February and August, with a target payout ratio of 60% to 80% of net profit after tax, excluding non-recurring items.
“Given our progress and strong balance sheet, the board believes this is the right time to introduce a sustainable dividend policy,” said Pip Greenwood, Chair of a2 Milk’s board, at the company’s annual meeting on Friday.
The company reported a robust cash balance of $969 million as of June 30, 2024, despite having never paid a dividend in the past.
Strategic Investments and China Expansion
Greenwood highlighted a2 Milk’s ongoing efforts to expand its China label registrations and develop its nutritional manufacturing capabilities. She noted that these goals could be achieved through acquisitions or commercial partnerships, although specific updates were not provided.
“This remains a top priority for management and the board, and we are making steady progress,” Greenwood said.
The board also indicated its commitment to evaluating capital management options, including potential special dividends, as the company executes its strategy and assesses evolving risks.
A2 Milk’s decision to pay dividends reflects its confidence in sustained growth and financial stability. As the company focuses on bolstering its market presence and operational resilience, shareholders can anticipate more consistent returns in the future.
