MBA403 Financial Analysis Report: A2 Milk Company Performance

This financial analysis report examines the performance of A2 Milk, a New Zealand-based company listed on the Australian stock exchange. The report assesses the company's suitability for investment, focusing on financial and non-financial indicators such as sales, profitability, and earnings per share. It highlights the company's growth in the dairy industry, its international expansion strategy, and its competitive advantages. The report also analyzes the company's remuneration structure and ownership, providing recommendations for potential investors. The analysis is based on the company's annual reports and relevant industry research, concluding that A2 Milk presents a profitable investment opportunity due to its consistent growth and market position. The report provides a comprehensive overview of the company's financial health, market strategy, and future prospects.

RUNNING HEAD: Financial Analysis Report
Financial Analysis
Report
[Type the document subtitle]
Laptop04011
[Pick the date]

Financial Analysis Report 1
Financial Analysis Report
The below mentioned essay enlighten the reader with the details about the financial and non-
financial performance indicators for the company A2 milk. The organization is a New Zealand
based organization that is listed on Australian stock exchange as well. Further, the essay
highlight the details about the suitability of the company for the purpose of investment. The
factors affecting the profitability of the company are analysed in the paper along with the
elaboration of several recommendations as well.
The annual reports of the company states that there has been an increment in the sales and
profitability of the company that states that it is profitable for the prospective investors to invest
in the business. The most important financial factor looked after while implementing the
investing decision is the profitability of the company and the dividend policy of the company.
The company A2 milk serve both the aspects in an optimal manner, therefore looking at the
financial analysis, it can be said that it is profitable for the investor to invest in the company
(Nystrom, and Winston 2016).
Further, it should be noted that the company has headquarter in Australia and is present in the
dairy industry. The organization initiates is work in different locations like Hong Kong,
Australia, US, China, Malaysia, Singapore, UK and New Zealand. The organization was found
in the year 2000 by Dr Corran McLachlan, since then the business is earning good profits in the
market. The core business areas of the company involve milk, infant solution and dairy products.
Talking about specific growth, it should be noted that the EPS (earnings per share) has been
increased from the previous year of 2017 to 39.25 (A2 milk 2019). The increment in the EPS
shows good profitability and market position of the company. The total share capital of the
company has also been increased to $ 787,854000 that depicts the interest of people in the
functions of the company. The dairy industry of Australia is ranked on the third number in the
nation that shows profitable production and selling activities of the companies present in this
industry. The industry produced A$4.3 billion in the year 2017/18 (Esty, and Fisher 2019).
Current business strategy of the company is to provide best quality goods and services to the
customers in the environment. The company wants its customers to recognize the brand through
the product, therefore they naturally create A2 protein milk that is highly demanded in the

Financial Analysis Report 2
environment. The organization has also started using international expansion strategy in the
business environment so as to succeed and increase the scope of business as well. The company
has trained its employees to produce high quality milk and serve it to customers at optimum and
affordable range in the market (Hegde 2019).
In this way, the brand is differentiated from its competitors in the target market. The market
potential of the organization to export its dairy goods in different parts of the world. The
products offered by the organization have good quality due to which it is demanded in the
environment. Therefore, business expansion in the Asian market will provide great exposure to
the organization. Increase proportion of the dairy industry in the Asian market has also insisted
the organization to expand its scope of business in diverse international market. The strength of
the company A2 milk is that it is very interactive with the people in the environment (Bodnár, et.
al., 2018).
The organization keeps on interacting with the people so as to attain details about their interest in
the environment. The organization effectively makes use of coordination process with other
departments like finance, marketing etc. that makes it more competitive in the environment.
Active coordination between several departments of the company will help the organization to
initiate activities on large scale in long run. This aspect would help the organization to organize
all the actions with facing any issue in the environment. Warwick Every-Burns who is a non-
executive director of A2 milk manages the remuneration department. The fixed remuneration of
the employees is based on their skills and experience and variable remuneration is a form of
incentive given when employee work above his boundaries (Davis 2018).
The LTI (Long-Term Incentive plan) and STI (Short-Term Incentive plan) are used to
remunerate employees. The wages are provided to employees on the basis of market rates and
the incentive plan help the employees to earn more in the environment. The ownership of the
company is divided into debt and equity, however the organization is increasing the level of
equity with an aim to expand its boundaries at different locations in the environment. The stock
of the company is valued fairly in the environment that states that the company provides
optimum dividend to investors in the environment. Apart from basic benefits of health security
etc. no other benefit is given to employees. Further, it is recommended to the prospective
investors of the A2 milk that they should definitely invest in the shares of the company (Raynes

Financial Analysis Report 3
2017). The company is progressing with a multiple speed in the environment that depicts the
growth and profitability of its investors as well. Therefore, if the people would invest in the
company now then, they would attain long term benefits in the environment. Thus, concluding
the above mentioned facts, it should be noted that the above mentioned report highlighted details
about the company A2 milk and factors affect the investing decision of a person in the
environment. The financial and non-financial factors of the company are being analysed in the
paper.

Financial Analysis Report 4
References
A2 milk., (2019) Stepping it up [online]. Available from <https://thea2milkcompany.com/wp-
content/uploads/The-a2-Milk-Company_FY19-Annual-Report_double-pages-1.pdf> [Accessed
on 30 Sept 2019].
Bodnár, Á., Hajzsér, A., Egerszegi, I., Póti, P., Kuchtik, J. and Pajor, F., 2018. A2 milk and its
importance in dairy production and global market. Animal Welfare, Etológia és
Tartástechnológia, 14(1), pp.1-7.
Davis, W., 2018. SWITCH TO A2 DAIRY?. Alternative Medicine, (42), pp.10-10.
Esty, B. and Fisher, D., 2019. The a2 Milk Company. HBS Strategy Case, (719-424).
Hegde, N.G., 2019. Research on A1 and A2 milk: A1 milk is not a matter of health
concern. Indian Journal of Animal Sciences, 89(7), pp.3-6.
Nystrom, J. and Winston, D.R., 2016. A2 milk marketing and human health. Journal of Animal
Science, 94, pp.18-18.
Raynes, J., 2017. Disrupting dairy. Food Australia, 69(2), p.42.