A2 Milk share price soars 8% as company regains money-making mojo

Bust out a bottle from A2 Milk Company Ltd (ASX: A2M). The share price is giving shareholders something worth celebrating today.

While the S&P/ASX 200 Index (ASX: XJO) is underwater by 2.14%, the infant formula company’s shares look rosy. The catalyst behind such differing performances today is A2 Milk’s full-year results for FY22 — which have been well-received by the market.

In early afternoon trade, the A2 Milk share price is enjoying an 8.35% boost to $5.32. The move positions the company’s shares at their highest level since 30 March this year.

Getting back on track

Investors who have been around the block would recall the days when A2 Milk was considered a gemstone of the ASX. However, the COVID-19 pandemic poured cold water on the fiery performance of the New Zealand-based company.

Between June 2020 and December 2021, A2 Milk’s trailing 12-month profits sunk from NZ$388.2 million to a meagre NZ$20.2 million. As you might expect, the A2 Milk share price collapsed in lockstep with the dwindling earnings.

Fortunately, today’s full-year FY22 figures hint that those difficult days may be behind the company. As The Motley Fool Australia reported earlier, the strained milk business bounced back in the latest financial period. Both revenue and profits returned to growth, leaping 19.8% and 42.3% respectively.

Pleasingly, net profit after tax (NPAT) for the period came in at NZ$114.7 million — more than five times greater than the paltry profits at the end of December 2021. This would suggest the bulk of the uptick in growth occurred in the second half of the financial year.

Boosting the A2 Milk share price

Shares in A2 Milk are likely getting a positive nudge from its share buyback news today as well. With a closing balance of $816.5 million in net cash at the end of the reporting period and more profits on the horizon, management made the call to announce a buyback program.

Shareholders will benefit from a return of capital of up to $150 million. For reference, this represents 3.7% of the company’s market capitalisation at the current A2 Milk share price.

The post A2 Milk share price soars 8% as company regains money-making mojo appeared first on The Motley Fool Australia.

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More reading

• A2 Milk share price on watch amid earnings beat and NZ$150m buyback
• 5 things to watch on the ASX 200 on Monday
• Earnings preview: Here are 3 ASX 200 shares reporting next week
• A2 Milk share price lags ASX 200 ahead of Monday’s earnings result
• How did the A2 Milk share price respond last time the company reported?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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