| 45 T T Hugh de Lacy Transactions signal growth A2 Milk announced a net profit after tax of $203m for the year to June. A2 Milk Company REGIONAL DEVELOPMENT In the wake of soaring profits announced earlier in the year, dairy products producer A2 Milk Company has bought the Pokeno, Waikato, plant of Yashili New Zealand Dairy, a subsidiary of China’s Mengniu Dairy Group. The $282 million purchase on a debt- and cash-free basis forms a key part of A2 Milk’s supply-chain transformation strategy, which envisages a $100m investment to increase the Pokeno factory’s capacity, while also adding a hundred new jobs over time. In the process, A2 Milk has sold off its 75% holding in Southland company Mataura Valley Milk for $100m to fellow New Zealand-based milk processor Open Country Dairy, which is also buying the 25% in Mataura previously held by the China Animal Husbandry Group. A2 Milk chief executive David Bortolussi describes the transactions as “a pivotal moment …. for the company”. “(They) enable (A2 Milk) to build a better, higher growth, lower risk, end-to-end business and deliver substantial benefits to shareholders.” He adds that the Pokeno facility was already playing a part in co-developing and producing A2 Milk’s English label formulae A2 Genesis and A2 Gentle Gold. The company is anticipating a loss of around $130m from the Mataura Valley sale, though that company will continue to supply it with A2 milk and A1 protein-free ingredients under a new supply agreement. Bortolussi notes that while Mataura Valley has “an advanced nutritional powder-drying facility that continues to have significant potential, (it) is no longer the optimal asset and pathway to achieve our strategic objectives”. Earlier this year, A2 Milk announced a net profit after tax of $203m for the year to June, up 21% from the previous year’s $167.6m, with revenue jumping to $1.9b ($969m) and net cash at $1.06b, up from $969m. EBITDA rose 12.4% to $274.3m, with the margin up 0.4% to 14.4%, and on the strength of its balance sheet, A2 Milk is delivering a dividend of 11.5 cents a share to stockholders. To top things off, company chair Pip Greenwood announced that once the deals were complete, including gaining the necessary Chinese approvals, A2 Milk would be offering shareholders a $300m special dividend. The company had succeeded in stemming its losses from the Mataura Valley operation, and also from its export business in the United States. A factor in A2 Milk’s transformation strategy is that it has been reliant on Synlait Milk, in which it has a 20% holding, to produce much of its infant formula. The dominant shareholder in Synlait Milk is Chinese giant Bright Dairy Holdings, so the effect of the Pokeno acquisition will be to bring more of A2 Milk’s production in-house while ensuring capacity to increase production. And the immediate future looks bright: the company expects revenue to grow at a high-single-digit rate in 2026, with an EBITDA margin of 15%-16%. A2 Milk is built on the claim that A1 proteins in many dairy cows of European descent are harmful to humans, while its own milk supplies come exclusively from cows that are free of those proteins. Spray Technologies 2025 Limited Supplies Delavan Nozzles in NZ and Australia. Locations Telephone Timaru +64 3 688 5310 Email icsc@icsc.co.nz Website www.icsc.co.nz Christchurch Rolleston iZone Industrial Controls: Where Automation Meets Intelligence Connecting Process, Data and People Electrical Design, Install & Maintenance Complete electrical engineering from design to servicing End-to-end Project Management From concept to commissioning - delivered on time, every time Instrumentation, Calibration & Safety Precision measurement and certified functional safety IT Networks & Fibre Structure Reliable and secure networking & fibre solutions Custom Software & Smart Data Analytics Turn your data into decisions with custom software, real-time insights, and intelligent reporting Process Automation & Control Systems Smarter, faster production with integrated automation Industrial Controls South Canterbury (ICSC) is proud to be built in Canterbury, with our base in Timaru supported by a Rolleston branch. 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