InvestNow News 30th Aug – Harbour – a2 Milk Steps Up Market Development
26th August 2019
The a2 Milk Company reported on earnings last Wednesday. In spite of net profit being 47% ahead of last year with a 41% increase in revenue, the market was disappointed by reduced margins, reportedly due to increased spending on marketing and, as a consequence, the price has fallen.
- a2 spent more on marketing and product development than expected
- We see this as building the foundation to be a global leader in dairy nutrition
- Significant runway remains in both China and the US
a2 Milk remains Harbour’s highest conviction position in equity growth portfolios. Despite the price fall after announcing its annual results, the share price today is still up 28% so far in 2019.
Our view is unchanged that a2 Milk is on a journey to become a global leader in dairy nutrition. Yesterday’s announcement to significantly increase investment in market development gives us confidence that they are prepared to sacrifice short-term gains in order to pursue large growth options. a2 Milk offers consumers a unique product proposition sitting strongly in the fast-growing healthy alternative category for nutrition.