A2 Milk shares lift after profit upgrade

Powder Milk And A Yellow SpoonShares in A2 Milk have climbed more than 10 per cent after the dairy producer lifted its full-year profit guidance due to continued demand in China.

A2 Milk also said it is well placed to respond to any further regulatory change in China governing the supply of infant formula.

The company lifted its profit guidance to $NZ350 million to $NZ360 million ($A333 million to $A342 million) – up from the $NZ335 million to $350 million it forecast in February.

Shares in A2 Milk were 16.5 cents, or 10.96 per cent, higher at $1.67 at 1033 AEST.

A2 Milk said it continues to successfully adapt its manufacturing and distribution model in response to recent regulatory change to the Chinese infant formula market.

“As a result, the company continues to perform strongly compared to its plan in the second half of FY16 (the 2016 fiscal full year),” A2 Milk said in a statement on Wednesday.

“Based on a review of its unaudited financial results to 31 May 2016, continuation of recent trading performance and no material change in market conditions in June, the company has determined it appropriate to further revise its full-year outlook upward.”

A2 Milk also said it expects to have a strong balance sheet at the end of the fiscal year, with cash on hand likely to exceed $50 million.

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