A2 Milk shares have surged on bumper profit predictions as the company struggles to keep up with soaring demand for its infant formula in China and Australia.
Parents of infants have complained of continuing shortages of high quality baby formula despite dairy companies boosting production and the big supermarket chains imposing customer limits on purchases.
A2 now expects sales of its a2 Platinum brand to be around $NZ68 million ($A64 million) for the six months to 31 December 2015 as demand among Chinese consumers soars.
Chief executive Geoffrey Babidge said the company's strong recent trading performance provides further evidence of the increasing appeal of the a2 Platinum brand in Australia and China and future growth potential.
"The company has recently increased the supply of a2 Platinum infant formula to our customers however we continue to experience a level of out of stocks on shelf," Mr Babidge said.
He said the changing and dynamic nature of the infant formula markets in both Australia and China continues to make forecasting challenging.
"The infant formula market in Australia is rapidly evolving and experiencing significant growth," he said.
A2 Milk Co raised its annual earnings forecast to $NZ33 million and $NZ37 million.
The forecast for the year ending June 30, 2016, was well ahead of its November estimate of $NZ22 million and earnings of $NZ4 million a year earlier, the Auckland-based, Sydney-headquartered company said in a statement.
The upgrade is the second in as many months as demand for a2's Platinum branded infant formula continues to exceed expectations.
The company is now forecasting group revenue in the range of $NZ300 million to $NZ315 million, up from $NZ285 million forecast a month ago.
Supermarket chain Coles recently limited customers to buying two infant formula tins per customer while Woolworths limited customers to four tins per customer.
The recent spike in demand is being blamed on Chinese customers who don't trust the products they can buy at home, and are willing to pay vastly inflated prices for Australian-sourced products.
Anecdotal reports suggest customers are getting around the supermarket limits to export tins to China which recently ended its one-child policy.
At least two popular Australian-made brands - a2 and the Bellamy's Organic range - are ramping up production but they have warned it will take time to catch up with demand.
A2 shares have more than doubled from 46.5 Australian cents at the end of May.
The company's shares were 35.0 cents, or 33.82 per cent, higher at $A1.385 at the close of trade on Friday.
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