ATM-A2 MILK

[Minimoke]

Confirmation today NZ isnt going to bend over to the Anti-formula advocates.

Looks like Australia is still heading to white label though.

https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/andrew-hoggard-food-safety-minister-on-the-infant-formula-label-changes/

[Teitei]

Confirmation today NZ isnt going to bend over to the Anti-formula advocates.

Looks like Australia is still heading to white label though.

https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/andrew-hoggard-food-safety-minister-on-the-infant-formula-label-changes/

WTF! Treating IF like tobacco.

[Minimoke]

WTF! Treating IF like tobacco.

Essentially yes. And some kind of drug - have to go to the pharmacy for "added extras" formula.

[Minimoke]

Mark your diary Monday 19 August 2024. results day

[Minimoke]

Settlement agreed.
For me the outstandig point was

"a2MC owns the intellectual property rights for the Product Specifications of the IMF products and is free from any restrictions or obligations under the Nutritional Products Manufacturing and Supply Agreement (NPMSA) to source
any Products from any person including Synlait, third party suppliers or internally."

Disappointingly A2 are agreeing to take a part in the Cap Raise. I still reckon they should have bought out Dunsandle.

Seems Mataua may not be going to plans as quickly as they would like. A2 going to work with Synlait (not Matuara) on a new SAMR product)

A2 going to pay back pay of $24.75m. Which will be a lifeline to Synlait.

All subject to a successful equity raise.

[Left Field]

A good win-win outcome IMO

Here's the full details.....

https://www.nzx.com/announcements/436290

Interesting to see progress on USA initiatives..

I'm happy to see ATM staying clear of a potential 'take-over' of SML and remaining relatively 'capital light'.  This agreement endorses a viable future for both ATM and SML.

[Left Field]

Had another read of the settlement statement.

While it is a win-win... and buyers entering SML yesterday in the 30c range are probably 'well positioned.'

The settlement also represents a huge win for a2, a2 ownership of all IP to all their IF products, minimum supply volumes guaranteed by Synlait,  flexibility to produce IF at MVM and guaranteed slot for new China label product at Dunsandal  Plus ability to terminate SML supply with 3yrs notice.

The $24 million payment includes money that was previously withheld by a2 so this money was probably already expensed as a liability.

As well as the above, participation in the cap raise allows a2 to double down on their previous 'investment' in SML while securing its supply lines for the foreseeable future.

[BlackPeter]

Had another read of the settlement statement.

While it is a win-win... and buyers entering SML yesterday in the 30c range are probably 'well positioned.'

The settlement also represents a huge win for a2, a2 ownership of all IP to all their IF products, minimum supply volumes guaranteed by Synlait,  flexibility to produce IF at MVM and guaranteed slot for new China label product at Dunsandal  Plus ability to terminate SML supply with 3yrs notice.

The $24 million payment includes money that was previously withheld by a2 so this money was probably already expensed as a liability.

As well as the above, participation in the cap raise allows a2 to double down on their previous 'investment' in SML while securing it's supply lines for the foreseeable future.

I guess this is exactly what win-win means. Both sides win.

A bit sad, though that this win-win was only necessary because brainless and selfish idiots on both sides started the war in the first place.

SML replaced by now the hapless leaders who started this dumb and for all sides damaging war. Not so sure whether A2M did the same thing?

[Left Field]

.....SML replaced by now the hapless leaders who started this dumb and for all sides damaging war. Not so sure whether A2M did the same thing?

Has A2 done the same thing? I'm not sure it needs to.

IMO Bortolussi has made the right moves in initiating the SML dispute to clarify ownership of a2.s IP etc. Under current leadership a2 has made impressive market share gains in China and is setting up a2 for future expansion in other countries incl USA and an expanded range of products (not so IF reliant.)

This 'agreement/settlement' is also indicative of reasonable  a2 leadership.

I always liked a2's 'capital light' model. However IMO a2's acquisition of MVM was a departure from 'capital light' and a potential SML takeover by a2 would have been and even bigger departure. This would have concerned me......particularly as IMO MVM is still not performing well for a2. I'm pleased this agreement shows a middle ground has been found for a2 in the interim.
 
Anyway.... just my ramblings FWIW. 

ps a2 ASM and update 19 Aug.

[Left Field]

And here it is folks......pretty healthy result at first glance

 https://api.nzx.com/public/announcement/436310/attachment/424903/436310-424903.pdf

• Revenue growth of 5.2% to $1,675.5 million
- Regional revenue: China & Other Asia segment up 14.1%, ANZ segment down 14.6% due to a change in English label IMF distribution strategy, USA segment up 8.2% and MVM external sales down 11.0%
- Category revenue: Total IMF up 4.6% with China label up 9.5% and English label down 0.3%6
, liquid milk in ANZ and USA up 3.3% and 7.4% respectively, other nutritionals7 up 36.7%
• EBITDA up 6.9% to $234.3 million with an EBITDA margin of 14.0% (up 0.2ppts)
• Net profit after tax (NPAT) attributable to owners of the Company up 7.7% to $167.6 million8
• Basic earnings per share (EPS) up 9.2% to 23.2 cents
• Closing net cash9 of $968.9 million up $211.7 million on June 2023 with operational cash conversion of 125.7%10
• FY25 guidance for revenue growth of mid-single digit percent and EBITDA margin (% of revenue) to be broadly similar to FY24 (see FY25 Outlook in the "FY24 Results Commentary and Outlook" announcement)

The following also looks promising for future growth

 Improved USA profitability significantly and commenced distribution of IMF with selected retailers in-store and online
under FDA Enforcement Discretion and progressed long-term IMF approval which is on-track for FY26 subject to FDA
approval
• Resolved Synlait arbitration disputes, including Synlait's acceptance of the validity of a2MC's notice of cancellation of
exclusivity, subject to Synlait completing its equity raise and the refinancing of its existing banking facilities. The Company
has agreed to support and subscribe for shares under Synlait's equity raise on terms to be agreed
• Progressed the Company's supply chain transformation by gaining access to a potential additional China label IMF
product registration slot with Synlait to be developed by December 2029 subject to SAMR approval. The Company
remains focused on securing further China label registrations and exploring other investment opportunities, mainly in
New Zealand and China

Presentation details; https://api.nzx.com/public/announcement/436310/attachment/424906/436310-424906.pdf

[winner (n)]

Sales up 5% and ebitda up up 7% a steady if not spectacular result

F25 guidance sales growth about the same with similar to F24 so expect another steady if not spectacular result again next year

That's how I see it

Looking at my notes they haven't really delivered on promises made over the last couple of years ......like margin improvement.

[Breezy]

Pretty healthy but pretty much priced in id say, there are a few fish hooks here and there when you read the full report.

[Breezy]

Sales up 5% and ebitda up up 7% a steady if not spectacular result

F25 guidance sales growth about the same with similar to F24 so expect another steady if not spectacular result again next year

That's how I see it

Looking at my notes they haven't really delivered on promises made over the last couple of years ......like margin improvement.

2 bill target now extended to 2027, outlook still cautious.

[winner (n)]

2 bill target now extended to 2027, outlook still cautious.

And EBITDA margin of high teens looks a bit optimistic to

But at least they make heaps

[Minimoke]

$970,000,000 in the bank. And still zero word of a dividend to long suffering shareholders. Other than perhaps there may be an announcement of a potential use of shareholder funds. I suppose at least impoverished kids are getting some of the cash.

I dont like it when they tell porkies to shareholders "The Company's capital allocation framework prioritises investment in growth initiatives ahead of returning capital to shareholders". Other than a bit of cash at Mataua they have done virtually nothing with allocating capital for years. Couldnt even make a go at Synlait when it was on its knees. The share buy back appears to have been an abject failure.

Very disappointing to see they are reporting on the nonsense that is Gender Pay Gap. But at least their efforts will target men to improve their lot. Basically only a few paragraphs - so  i'll cut then some slack.

USA and Mataura expected to be profitable in 2027.

Operating profit up only $1m. Pathetic.

Profit for year up $9m. Pathetic (this includes $40m interest from having our cash in the bank)

Net assets up $107m. pathetic. Just goes to show they are pretty hopeless at managing capital. This number wouldn't be so rosy if they didnt have our cash in the bank