Dual-lister A2 Milk has reported a more than 50 per cent jump in half-year net profit, as the company expanded market share in China despite slowing demand there.
The dairy producer has weathered a slowdown in consumer spending in its largest market, China, which has seen domestic demand falter amid a trade dispute with the United States.
Australian vitamin maker Blackmores Ltd was the latest corporation to warn of weak sales in China, its biggest export market, which it said would weigh on its net profit in the second half of the year.
Managing director and chief executive Jayne Hrdlicka said A2 is not experiencing slowing demand in China that other companies have reported, and there is a healthy underlying demand for its products.
"All stages of our infant formula business saw growth in the first half and the outlook for the second half continues to be attractive," Hrdlicka said in a media conference call after announcing the results.
The company lifted its market share in China by pushing into smaller cities.
Ms Hrdlicka said there is still a lot of scope to grow brand awareness in China and the company would be reinvesting resources into marketing activities in the second half.
"Market investment in the second half will be double that in first half ... most of that would go to brand awareness activities," she said.
Net profit was NZ$152.7 million for the six months to December 31, the first half of the company's financial year, compared with NZ$98.5 million in the same period a year earlier, the company said in a statement.
A2 shares rose more than 8 per cent to an 11-month high of NZ$13.95 on the NZX in early trade on Wednesday
The company was trading 7.62 per cent higher at $13.28 on the ASX at 1035 AEDT.
Chinese parents have embraced the company's infant milk powder that is marketed as easier to digest than conventional milk because it lacks the A1 caesin protein.
But competition has increased as others such as Nestle SA launch A1-free infant formulas in China.
The company said total revenue for the half year jumped 41 per cent to NZ$613.1 million, while revenue from China and other Asia markets grew about 50 per cent.
Revenue growth in the second half is expected to be broadly in line with the first half, the company said in a statement.
In a separate release, New Zealand dairy giant Fonterra said it was signing up farms to supply milk for A2 in the 2019/2020 season.
CHINA SALES BOOST A2 MILK PROFIT
* Net profit up 55pct to NZ$152.7m
* Revenue up 41pct to NZ$613.1m
* No interim dividend
