ATM - A2 Milk Corporation Limited

[Leftfield]

Wotherspoon said on Friday (25 September) A2 Milk's UK business remains loss-making but was now profitable "at a gross margin level", with sales growing faster.

Does that mean they have been selling at below cost up to know - horrible thought

Winner - do you expect ATM (or any company) to be profitable from day one with a new product in a new market such as the UK ?

[winner69]

Winner - do you expect ATM (or any company) to be profitable from day one with a new product in a new market such as the UK ?

but I would hope that they would sell the stuff at above the cost of buying and processing the raw milk into the finished product (usual definition of 'gross margin') early on

I can live with a loss when sales and marketing costs etc are included

[NT001]

Wotherspoon said on Friday (25 September) A2 Milk's UK business remains loss-making but was now profitable "at a gross margin level", with sales growing faster.

Does that mean they have been selling at below cost up to know - horrible thought

I'm not an accountant but my understanding is that gross margin simply tells you whether the amount generated by selling a product is greater than the amount it has cost you to create that product, without counting costs such as office expenses, rent, management salaries etc. So I would assume this means the amount received from retailers by a2MC (UK) is greater than what it pays out for procuring the milk from farmers and processing, packaging and transporting it to the retailers. I'm not sure whether or not advertising and promotion costs are counted as production costs or not. But obviously the main cost is in buying, processing, packaging and delivering the product to market, so if that is profitable already I think that's a pretty good sign.

[Leftfield]

But obviously the main cost is in buying, processing, packaging and delivering the product to market, so if that is profitable already I think that's a pretty good sign.

Wotherspoon is also talking about being 'in the black in the UK' in 2016 , and I take that as v encouraging. The current uncertainty re 'investment' (i.e. loss) in 'new' markets such as UK and USA has been well priced in the SP by the market.

I take it as very encouraging now that UK is headed to profit, as is Australia (and I suspect China.) Time will tell.

[winner69]

I'm not an accountant but my understanding is that gross margin simply tells you whether the amount generated by selling a product is greater than the amount it has cost you to create that product, without counting costs such as office expenses, rent, management salaries etc. So I would assume this means the amount received from retailers by a2MC (UK) is greater than what it pays out for procuring the milk from farmers and processing, packaging and transporting it to the retailers. I'm not sure whether or not advertising and promotion costs are counted as production costs or not. But obviously the main cost is in buying, processing, packaging and delivering the product to market, so if that is profitable already I think that's a pretty good sign.

Almost right

So I would assume this means the amount received from retailers by a2MC (UK) is greater than what it pays out for procuring the milk from farmers and processing, packaging and transporting it to the retailers.

a2m seem to include freight/transport in other expenses - not included in Gross Margin

My point was I would have thought that even in the early stages of production one would want to at least sell the stuff for more than it costs - like buy something for a buck one and sell it for at least a buck so the gross margins can go to sales / advertising / admin and all the other costs

Who am I to question - suppose they know what they doing

As a matter of interest a2m Gross Margin in total is about 33% of sales - a 50% markup on cost

[sb9]

What's up with the big pre-open trades this morning, 42mln shares traded.

[ddrone]

What's up with the big pre-open trades this morning, 42mln shares traded.

It's the placement isn't it?

[sb9]

It's the placement isn't it?

Don't think so, the recent placement was for 58,823,529 for which the notice was issued to NZX on 15 Oct.

[Kirk]

Im think Milford just sold out there stake in a2. Last SSH they had 42,792,872. The interesting thing is who bought. About a 6% stake of the company. If you alsso consider the placement someone could have just acquired about 14%

[sb9]

From the Australian....could only copy this little extract as its paid content.

Freedom sells down a2 Milk stake

The Perich family and its listed food group Freedom Foods have sold down a combined stake in listed milk company a2 Milk to 10.4 per cent, from 19 per cent, as Freedom conducts a capital raising this morning. Freedom sold 42.5 million a2 Milk