A2M - The A2 Milk Company

[MarketMatters]

Hmmmmm. Rings bells like Vocus! Let's hope it's not cascading.

 

[bigdog]

They have probably done a bit of reading on the mess that Jayne left behind in Jetstar Asia and the direction she was heading in Qantas before they saw the light

Boggo, What are some of details of the mess that Jane left behind in Jetstar Asia?

I am worried about Jane’s ability at A2 Milk as CEO??

 

[HelloU]

OT
just want to store this here in case I need it later:
"no point in crying over spilled milk".

hey bigdog ....2 things
the other milk mob over there may be worth a look SM1 - I have not looked in a while as sold when it fell pre report (new finance strategy for me - don't ask)
if milk is beginning to sour then that water mob is coming up to 'put up or shut up' time with 4c.

3rd ....footy was fantastic. No wonder those corporate boxes cost so much.

 

[Boggo]

Boggo, What are some of details of the mess that Jane left behind in Jetstar Asia?

I am worried about Jane’s ability at A2 Milk as CEO??

No personal experience with her, my post is based on comments of few colleagues went to Asia with all the best intentions and hopes of a successful Jetstar Asia.

They were familiar with the culture and how you needed to learn to walk quietly on eggshells when you were a player and a potential competitor in their front yard.

From the comments etc that I have heard Jayne chose to ignore the advice of those who knew better and went on to rattle all the wrong cages.
Hiring of incompetent ground handlers, then firing them and taking on another resulting in being sued by the first etc etc.
That sort of stuff gets noticed and licence applications etc get refused.

Unless she has changed her manner and learned I would be concerned about any venture in Asia that she may be associated with.

The pprune forum may have some bits of info (aside from the grizzling) that may provide further insight, eg...
https://www.pprune.org/9809930-post20.html

 

[bigdog]

NZ article on A2 Milk

The decision by a2 Milk chief executive Jayne Hrdlicka to quit 357,000 of her shares just two months into the job has drawn fire from Shareholders Association head Michael Midgely.

https://farmersweekly.co.nz/#
Dairy - 1 October 2018
a2 shares sale sparks debate
by Richard Rennie

The decision by a2 Milk chief executive Jayne Hrdlicka to quit 357,000 of her shares just two months into the job has drawn fire from Shareholders Association head Michael Midgely.

Hrdlicka sold her shares for $4.3 million before the high flying company’s share price eased, to $11.95 by the middle of last week, down from $12.51 when the firm announced the sale to the market.

The reasons given for the sale include a need for Hrdlicka to fund tax obligations relating to the recent automatic exercise of time-based rights and to fund commitments made by her before taking up the job with a2 Milk.

She has retained interest in time-based rights and performance rights.

The time-based rights give her the right to acquire ordinary shares in the company, to compensate for the forfeiture of incentive entitlements from her former employer, Qantas-owned Jetstar Group, where she was chief executive for five years.

Estimates are she still has 250,000 a2 shares which become fully tradable by August next year.

Australian Financial Times columnist Joe Aston reported that when employed by a2 Hrdlicka was paid $600,000 up front in cash, two-thirds of the value of the short-term incentives she was to receive with her then employer Qantas, and 599,245 a2 shares.

The 357,000 shares became eligible for trading on September 3, two weeks after a2’s 2018 financial year results were announced.

Midgely said the association is paying close attention to Hrdlicka’s actions and it is a “bad look” for the company.

“Different companies have different policies but you need the approval of the company to do this. A quick look at a2’s policy sees a broader allowance for share sales than some other companies.”

He said the reasons given suggest there could have been a better way to organise the payments Hrdlicka had to make than with the shares’ sale.

“And in this case, to have to have a total sale of the shares? I would have thought a bit of advance planning would have avoided that.

“As a matter of principle we are not very happy about golden welcomes to incoming chief executives.

“If these payments are going to happen, why can they not just be cash?”

The shares were included in her remuneration that also includes a salary of A$1.5 million.

Midgely said regardless of how eligible the chief executive might have been to sell her shares it is not a particularly positive signal to investors and the market and more so for a company like a2 Milk that has a high price to earnings ratio.

A2’s P:E ratio has investors paying about 32 times over earnings against a sector average of 21.

Latest valuations have the company worth $9.2 billion, with annual revenue of $922 million.

Following sale on September 21 an announcement was made to the stock exchange that investment firm BlackRock had lifted its stake in a2 Milk from 5.03% to 5.212%.

BlackRock is the world’s largest asset manager with US$6.29 trillion of assets under management.

A long-time recruitment consultant said some companies don’t allow chief executives to sell their shares but NZ lacks any clear recording of what they are being paid in shares.

“In the United Kingdom the Financial Times keeps a list of shareholdings held by directors and will report on any sales or movements.

“It is very much watched by the investor market.”

That comes amidst growing shareholder dissent in the UK over disparities in executive pay levels, with reports of an 18% rise in FTSE 100 bosses’ salaries last year alone.

 

[rnr]

Will price bounce off the $9.30 resistance level or will price continue down and close the old gap?

 

[notting]

Fell through 9.20 and revisited in a bullish way on Friday.
Meeting resistance again this morning.
I'd mark this as an important week for direction.
All things associated with China have been taking a pounding over the last few months.
China can't change it's culture of ripoff, theft, extortion and graft overnight. it's in their DNA.
Whilst Trump is doing the right thing, there isn't really an answer to China that is economically good for anyone other than allowing them to continue, which is starting to pose a major security risk for the entire world.
So sentimentally you'd have to say the downside is where the bias should be

 

[Knobby22]

Oh I don't know.
It's a different product which is being copied but it will take years to compete. I predict quite a bit further to rise yet.

 

[galumay]

China can't change it's culture of ripoff, theft, extortion and graft overnight. it's in their DNA.

I think its human DNA, just look at our politicians, rorting hand over fist, $100's of k's of printing expences to related parties, $40k internet charges fraudulently claimed, then repayed without penalty, jobs for girlfriends outside all guidelines, just to mention 3 recent examples. Look what the banking RC uncovered in terms of corporate ripoff, theft, extortion and graft.

I dont think we have much high moral ground when it comes to China.

 

[bigdog]

SP at10:25 today

ASX Investor presentation today
17/10/2018 7:30:05 AM 34 Investor Presentation

New data reported

 

[bigdog]

Was Jayne demoted from Jet Star CEO to run the Loyalty Business for a short period then resigned to join A2M?

Article today's Herald Sun

‘WE COULD HAVE BEEN A LITTLE MORE CLEAR’
Herald Sun - Wednesday, 21 Nov 2018

THE head of the board at A2 Milk has conceded the dairy company could have better explained to investors arrangements around the recruitment of chief executive Jayne Hrdlicka.

Controversy has surrounded the decision by Ms Hrdlicka in September to sell $NZ4.36 million ($4.1 million) worth of A2 shares two months after taking up the role.

At the time, the dairy group said she sold the shares to meet tax obligations, and commitments made before she joined the company from Qantas Airways, where she ran its loyalty business.

A2 chair David Hearn yesterday said the board had decided it was appropriate to compensate Ms Hrdlicka — for the share-based Qantas incentives she would forfeit when she left the airline — with shares in the dairy group.

Directors believed that was the best way to align her interests with those of A2 from the day she signed up to join the company at the end of last year.

“With the benefit of hindsight, we certainly could have done things perhaps differently,” he said, speaking at the group’s annual meeting in Melbourne yesterday.

“We recognise that we could have communicated things better.”

The admission came as Auckland-based A2, which is listed in Australia, reported a 64.5 per cent increase in net profit to $NZ86 million in the first four months of its financial year, underpinned by continuing growth in its Australian, Chinese and American markets.

Revenue was up 40.5 per cent, compared with the same period a year ago, at $NZ368.4 million, the group said. It forecast revenue growth would continue over the rest of the year “but at a slightly more moderate rate than in the first four months” .

The company said it expected its earnings-to-sales ratio over the rest of the year to “be broadly consistent with (that of the past financial year) reflecting a higher gross margin percentage” , offset by increased marketing spending and foreign exchange headwinds.

“We have had a great year and we are off to a strong start (this financial year,” Ms Hrdlicka said at the meeting.

“We have a strong brand, special culture and unique proposition, the combination of which positions us very well for the future.”

“We are not concerned about the current regulatory dynamic in China and elsewhere in the world.”

A2 shares fell 1.2 per cent, or 12c, yesterday to $9.68.

 

[bigdog]

https://www.usnews.com/news/busines...-slide-after-wall-street-losses-nissan-arrest

The association said the board was at fault for allowing the situation to arise, and to provide a signing on bonus of about $7m with no performance component was "remarkable".

"To do so for a new CEO who has no great experience in A2 Milk's field of business is unprecedented. Adding to questions around the board's judgement is the fact that the new CEO base rate is far higher than that of Mr Babbidge who was responsible for driving the massive growth that [A2 Milk] has enjoyed to date," the association said.

A2 proposes big hike in directors' fees
GERARD HUTCHING15:24, Nov 19 2018


A2 Milk directors will receive a hefty fee hike if a proposed resolution is passed at the company's annual meeting on Tuesday.

Chairman David Hearn's fee will rise by 37.5 per cent to $165,000, as will the three independent non-executive directors, who will be paid a similar amount.

Deputy chairwoman Julia Hoare is set to receive $210,000, up 27.3 per cent. Her fee is higher than Hearn's because he has an executive role in relation to the company in Europe and the United Kingdom.

Frequent critic the Shareholders Association has given a qualified blessing to the rises, acknowledging A2 has grown and performed well over the past few years, and shareholders have benefited.

"In our view, the proposed fees are towards the top of the scale and unless there are extenuating circumstances, we would not expect the board to come back to shareholders seeking a further increase for at least two years."

However in a preview report prior to the annual meeting, it has blasted chief executive Jayne Hrdlicka for pocketing $4.36 million after cashing in shares, only two months into the job. A2 Milk said at the time she did so to meet tax obligations and commitments made before she joined the company.

Hrdlicka's package is in excess of $9m for her first year, made up of a base salary of $1.61m, a signing on bonus of $630,000 and 599,254 share options she can exercise between August 2018 and August 2019.

Having now sold the bulk of her shares, she has a balance of 242,022 that she can dispose of up to August next year and if sold at the current share price these will realise $2.63m.


"In our view, Ms Hrdlicka has impacted on confidence in the company by her (completely legal) actions in selling, and this must raise questions about her judgement. If the situation was unavoidable, it would surely have been better for A2 Milk to disclose the need to sell at the time when she was employed, rather than after the event."

The association said the board was at fault for allowing the situation to arise, and to provide a signing on bonus of about $7m with no performance component was "remarkable".

"To do so for a new CEO who has no great experience in A2 Milk's field of business is unprecedented. Adding to questions around the board's judgement is the fact that the new CEO base rate is far higher than that of Mr Babbidge who was responsible for driving the massive growth that [A2 Milk] has enjoyed to date," the association said.


It opposed a resolution that Hrdlicka be appointed managing director on the grounds there should be a clear separation of the governance and management roles and to avoid the conflicts of interest that will arise from a dual role. It said the chief executive should report to the board and not be a "first among equals".

An A2 spokesman acknowledged Hrdlicka's share sale had not resonated well with shareholders.

"We paid what we paid to get a chief executive of the calibre we have today. Jayne was leaving a sizeable equity position from her previous role and the company needed to compensate her for some of what she was leaving behind.

"It is the board's view that what it was seeking to do was align Jayne's interest to the company as early as possible."

He said the previous remuneration pool was set two years ago when the share price was about $2 and the revenue was $350m.

Since then it had become an ASX100 and NZX10 company with revenue approaching $1 billion and market capitalisation exceeding $7b. A benchmarking review it had commissioned convinced the board the new remuneration pool was a fair one.

It was a multinational business with "enormous" potential, but also with enormous demands and significant risks to navigate. As well, it was sizing up the possibility of an additional directorship.

Meanwhile Swiss banking giant UBS has splashed out $379m on A2 shares to give it a 5.07 per cent holding in the company.

In September, United States investment company Blackrock bought a 5.21 per cent stake in A2.

The dairy marketer's share price has fallen from a high of $14.10 to $10.31 on Monday, although as recently as 2015 the shares could be picked up for 50 cents each.

While most cows carry both A1 and A2 proteins, A2 milk comes from herds that that produce milk naturally free of the A1 protein.

Production of A1 or A2 type milk depends on a cow's genetics, and research indicates A2 may be healthier for people who are susceptible to diabetes, heart disease, autism, schizophrenia and Crohn's disease.

 

[bigdog]

Jayne's last interview about her selling of shares on Bloomberg for "tax obligations"



For investors like me ...the sentiment sounds very negative and my patience is certainly being tested.


Some comments I found after watching the video:

She uses all her upcoming shares as defense for her actions of selling her first lot of shares that came through...as we found out painfully yesterday, she intends to sell her upcoming shares too - so she was plainly BSing through that. You can tell in her voice as soon as the newsreader makes questions about her share sale, Jane's starts stumbling on her own words.

She needs to learn that her "personal motives" as a CEO of a company can impact shareholders especially when it involves selling the company shares shes in charge of...get a loan or set yourself up on a payment plan ffs. Does she realize that everytime she sells shares, surprise surprise, that's a Captal gains tax event?

 

[bigdog]

NZ article found in $NZ

The US federation filed a complaint with the country's National Advertising Division, arguing that "A2 milk falsely promises consumers that its product is 'easier on digestion' as compared to conventional milk and that consumers can 'avoid digestive discomfort' and will 'feel the difference,'" according to a statement.

https://www.newsroom.co.nz/@pro/201...eo-not-worried-by-action-by-us-producer-group

A2 Milk CEO not worried by action by US producer group
Tuesday 20th November 2018

A2 Milk Co chief executive Jayne Hrdlicka is not concerned about a bid by the US National Milk Producers Federation to haul it over the coals for allegedly making false advertising claims there.

Hrdlicka said she was confident A2 Milk would be successful in the US, where it has lifted its points of distribution by 50 percent in the first four months of the current financial year.

"The science is solid. We have gone through all the appropriate steps from a regulatory standpoint, consumers love our product, retailers love our product and the traditional dairy producers are nervous so they are going to fight dirty," she said on a media call.

"All they are doing is drawing attention to the fact that there is a great proposition in the market that makes a difference for people and that consumers are excited about," she added.

The US federation filed a complaint with the country's National Advertising Division, arguing that "A2 milk falsely promises consumers that its product is 'easier on digestion' as compared to conventional milk and that consumers can 'avoid digestive discomfort' and will 'feel the difference,'" according to a statement.

It alleges the research underlying A2 Milk's "claims contains errors in study design, methodology, and population selection and is unreliable and clinically insignificant."

According to the federation, NAD then referred the case to the Federal Trade Commission, when A2 Milk declined to participate in a review of its advertising claims. Radio NZ also quoted Clay Detlefsen, a senior executive at the National Milk Producers Federation, saying the case could end up in court.

Hrdlicka said the behaviour of the traditional milk producers in the US is similar to what A2 Milk saw in Australia when it first began to establish the brand.

"We have been there. We know how the story plays out and we know how to play for the long term," she said.

New Zealand dairy giant Fonterra also vigorously rubbished the science behind A2 milk until February this year when it did an about-face and formed a marketing alliance with A2 Milk.

Global rival Nestle is also now selling an A2-based infant formula in China in competition with A2's Platinum brand.

Hrdlicka also said that the company is not seeing any fallout from the US-China trade tensions, despite being focused on both markets.

"We have had no issues with respect to trade wars and dynamics at any level because we just stay focused on building out our brand for the long term," she said.

She made the comments after the company announced revenue in the four months through October rose to $368.4 million, up 40.5 percent on the same period a year ago, while earnings before interest, tax, depreciation and amortisation rose 58.5 percent to $124.2 million. Net profit was $86 million, up 64.5 percent, the company said in a trading update for its annual meeting in Melbourne.

"We have had a great year and we are off to a strong start in FY19. We have a strong brand, special culture and unique proposition, the combination of which positions us very well for the future," said Hrdlicka.

The stock was up 2.2 percent at $10.70.

 

[Craton]

First there was A2, then there was A2 Platinum Premium and Premium A2 Milk powder with Manuka honey. Surely there must be an A<insert your choice of alphanumeric here>being released soon too...

 

[noirua]

a2 milk is sold in ASDA in the UK though it is gluten free. Priced quite high at £1.39 $2.54 per Litre - sometimes on offer at £1.00 $1.83. They went over to cartons from plastic bottles. Fresh milk is available as low as £1.09p $2.00 for 2 litres or 4 pints.
https://groceries.asda.com/aisle/milk-butter-eggs/fresh-milk/_/111623

You will notice that milk is still mixed up - sold in pints and litres. Also prices all over the shop.

 

[Ann]

I drink this stuff and have done for nearly twenty years although it doesn't taste as good as it used to, at least I can still drink it without getting sick . Do I own the shares, no! Fool that I am.

Sequoia Fund Q4 Letter: New Positions in a2Milk, Electronic Arts & Melrose

 

[HelloU]

gets hit with the short stick though - but survives
synlait supplies, and clover sells em little black things

they have the best corporate boxes at the footy .......... full of all u can drink ....milk.

 

[bigdog]

Motley Fool reports
https://www.fool.com.au/2019/02/15/a2-milk-share-price-tumbles-on-china-export-concerns/

A2 Milk share price tumbles on China export concerns

The A2 Milk Company Ltd (ASX: A2M) share price is on course to finish the week with a day in the red.

At one stage on Friday the infant formula and dairy company’s shares were down over 4% to $12.20.

They have since recovered a touch but are still down over 3% at $12.33 at the time of writing.

Why is the a2 Milk share price under pressure today?
With no news out of the company or broker notes that I’m aware of, it looks as though the catalyst for this selling has been reports that New Zealand exporters are facing delays at Chinese ports.

According to the NZ Herald, New Zealand’s biggest seafood exporter Sanford has been impacted by these delays.

It is reportedly having issues getting salmon exports cleared through Chinese ports and authorities have not given a reason for the delay. There are concerns that this could be in retaliation to New Zealand’s recent Huawei 5G ban.

Though it is worth noting that dairy giant Fonterra hasn’t reported any issues.

A spokesman told the paper: “We enjoy a long-standing and constructive relationship with China and our many customers there. While of course we always keep a close watching brief on international trade developments, we have no cause for concern in China and aren’t experiencing any conditions in our export relationship which are out of the ordinary.”

 

[Knobby22]

I'm not thinking of selling.
A2M is becoming less reliant on China in any case. Can't wait for the latest report.