The shares are up 3.1% to $7.23 after lifting 5.7% last Friday on news it had hired Edith Bailey away from the competition. She is slated to take up the position later this year.
It “looks like a good hire”, Fat Prophets head of research Greg Smith says, noting Bailey comes with the right experience from Danone and in the infant nutrition category in key markets for A2 – China, Australasia and South-East Asia.
Market-darling A2 Milk has fallen out of favour after delivering a series of profit warnings over the past year as covid-19 severely restricted its daigou or cross border trade into China.
The milk marketing firm now expects annual sales of $1.2 billion to $1.25b in the June year versus the $1.8b to $1.9b it forecast in September last year.
It has also said an immediate recovery is not expected but it is heavily investing in the brand as part of its approach to addressing the situation.
The company is due to announce its full-year result at the end of August.
Jarden director of equity research Adrian Allbon says a key factor in the result will be any change in the level A2 Milk invests in marketing to support its brand and replace its former daigou activity.
Bailey’s most recent role was consumer marketing director for Australia and NZ, with Danone Nutricia’s Specialised Nutrition division.
According to A2 Milk, she was responsible for leading the development of the overall portfolio strategy for ANZ Specialised Nutrition, including the acceleration of the innovation pipeline and capability.
“A step in the right direction and A2 will need to keep innovating to improve its position in a market where competition is rising,” Smith said.
He says while it’s not “a silver bullet by any means” it’s been well received by the market and particularly those investors that have been ‘fishing’ around the lows in recent weeks.
Allbon says the appointment looks good on paper in terms of supplementing industry knowledge and given the company still needs to replace outgoing chief executive for Asia Pacific Peter Nathan in time for his departure.
NZX senior dairy analyst Amy Castleton says Bailey’s extensive experience “suggests she’ll be a good fit for the company and help improve their prospects”.
She “seems like she could help turn the company around from where they currently are”.
Harbour Asset Management director and senior research analyst Øyvinn Rimer also said her background looks highly relevant for the role at A2 Milk.
The company may have also scored some points when it said the Overseas Investment Office has given it the green light to buy a 75% interest in Mataura Valley Milk, located in Southland.
That move gives it the opportunity to participate in nutritional products manufacturing, provides supplier and geographic diversification, and strengthens its relationship with key partners in China.
Business Desk
