November 22, 2019
New Zealand's a2 Milk doubles marketing spend to expand in China and US
Shares for the dairy producer went up to a two-month high as the company forecasted improved operating profit margins from its increased marketing expenditure, reported Reuters.
a2 Milk will spend 200 million NZD (~US$127.9 million) for marketing to expand its market to smaller China cities and further develop its United States profile. It spent 135.3 million NZD in 2018.
Expected earnings are about 29% to 30% for the full year, before tax, interest, depreciation and amortisation.
Shares for a2 Milk fell 24% after investors were concerned over the company's higher costs after it announced its full-year earnings in August 2019. These concerns have been alleviated after the company's latest marketing expenditure announcement.
Its share price increased 1% to 15.21 NZD, but it is still lower than the levels before its full-year earnings announcement in August. The company is expected to post its biggest gains soon.
a2 Milk is based in Auckland, New Zealand, and promotes its milk products as an easily digestible product compared to normal milk, as a2 milk doesn't contain the A1 casein protein.