A2 Milk Acquires Pokeno Nutritional Line for 2.82 Billion NZD, Boosts China Market Presence

A2 Milk, a leading dairy company, has announced a strategic acquisition of the integrated nutritional product line in Pokeno, New Zealand's North Island. The deal, valued at approximately 2.82 billion New Zealand dollars, involves purchasing the asset from a subsidiary of a major dairy company. This acquisition is part of A2 Milk's broader strategy to enhance its market presence in China, a region of significant growth potential. The asset includes two registered infant formula products in China, which are crucial for the company's market strategy in the region.

In addition to the acquisition, A2 Milk plans to invest an extra 100 million New Zealand dollars to expand production and gradually hire over 100 new employees. This investment is aimed at increasing production capacity and meeting the growing demand for infant formula in China. The company's focus on the China market is evident in its recent performance, where it has seen a 10% increase in overall infant formula sales, with English-labeled products growing by 17%.

In a parallel move, A2 Milk will sell its stake in Mataura Valley Milk to Open Country Dairy, expecting to net approximately 100 million New Zealand dollars. However, this transaction is anticipated to result in a disposal loss of about 1.3 billion New Zealand dollars. The board of directors has proposed a one-time special dividend of 3 billion New Zealand dollars, to be distributed after the transfer of the China formula registration to the A2 brand and the completion of the Mataura Valley Milk divestment.

The company has set new financial targets, aiming for an EBITDA profit margin of 15% to 16% by the end of the fiscal year in June 2026, surpassing the 14.4% target for the 2025 fiscal year. For the current fiscal year, A2 Milk expects "continuing operations" revenue to grow by a high single-digit percentage. In the 2025 fiscal year, A2 Milk achieved a net profit of 2.029 billion New Zealand dollars, up from 1.676 billion New Zealand dollars the previous year, with revenue reaching 19 billion New Zealand dollars, a 14% year-on-year increase. This growth aligns with the company's initial target of low to mid-teens percentage increase. The board has declared a final dividend of 11.5 New Zealand cents per share, with a dividend policy of distributing 60% to 80% of net profit after excluding one-time items.

On the operational front, A2 Milk has seen its market share in China's infant formula sector reach a new high. The company continues to focus on the China and Asia-Pacific markets by optimizing its supply chain and changing suppliers. This strategic shift is part of A2 Milk's broader plan to enhance its profitability and market presence in the region. The company's recent performance in China, with a 10% increase in overall infant formula sales and a 17% increase in English-labeled products, demonstrates its success in this market. The acquisition of the Pokeno nutritional product line and the investment in production expansion are expected to further strengthen A2 Milk's position in the China market and drive future growth.