The a2 Milk Company (ASX:A2M) released a trading update for FY18 and an outlook for FY19

The Group announced that its unaudited Group revenue for the financial year ended 30 June 2018 (FY2018) totalled ~$922 million which represented a growth of 68 per cent on the prior corresponding period and now the Company expects that EBITDA to Sales ratio for FY2018 will be approximately 30 per cent. The Company during its planning process for FY19 (assuming general trading conditions do not change materially) expects that there will be further growth in revenue in FY19 particularly in respect of nutritional products and there will be an increase in overhead costs as compared to FY2018, primarily due to an increased headcount for China and the Corporate office to support the increasing scale of the Company.

Further, the Company expects that marketing expenditure in FY19 (as a percentage of sales) will be higher than FY2018 given continuing investment in Australia, re-phasing of 2H FY2018 activities in China and elevated investment to support the US market expansion. The Company also included the one-off costs in FY19 expected figures which are associated with the transition to a new CEO which was recently advised. The Company expects that EBITDA to Sales ratio for FY2019 will be broadly consistent with the Company’s expectations for FY2018. The stock price slipped by 2.77 per cent and traded at $10.52 (as on 12 July 2018; 04:00 PM AEST).


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