A2 Corp declares a maiden profit

Thursday 17th February 2011

Dairy entrepreneur A2 Corp says it has made it first profit since it was established 11 years ago.

The Auckland-based company reported a net profit $894,000, or 17 cents/share, in the six months to December 31.

In the same period the previous year, it lost 19c/share, a loss of $717,000.

Revenue for the six months was $19.3 million ($249,000 in the previous period), mostly from its Australian operations.

Earnings across the Tasman rose 20% after switching to producing a dairy product rather than the original strategy of collecting royalties from third parties producing milk containing the A2 type of beta casein protein.

"Our immediate aims are to continue to expand in Australia and New Zealand, to enter new dairy beverage markets with partners, and to supply powder and infant formula sourced locally, initially into Asia," said managing director Geoffrey Babidge.

The company bought out its A2 Dairy Products Australia Pty Ltd operation last year and spent A$7.5 million on a processing and packaging plant in Sydney, using a combination of a $3.9 million share placement to existing shareholders AMP Capital Investors (New Zealand) and Freedom Foods Group.

The company has also bought out its US joint venture A2 Milk Company LLC from former partner Idea Sphere Inc.

The company has claimed that dairy cows originally produced A2 type of beta casein protein only, but the breeding of European cows for higher yields has led to some cows producing an A1 type of the protein and that many milks in shops are a mix of the two types.

It said that milk with only the A2 type of protein "may provide protection" from a range of intolerance responses to cow's milk protein and assist digestion.

When the milk was originally marketed in 2003, it was sold as a "risk free alternative" to standard milk produced by dairy giant Fonterra, which contains a mix of A1 and A2 beta casein proteins.

A2 Corp claimed the beta casein A1 found in most cows' milk sold in New Zealand had been linked with the development of coronary heart disease, childhood diabetes and also implicated in autism and schizophrenia.

Food manufacturers are legally barred from making therapeutic claims for their foods - such as being capable of curing illness - unless they substantiate the claims with scientific testing and register the food as a medicine.

So the company "knocked" the ordinary milks, claiming that "beta casein A1 may be a primary risk factor for heart disease in adult men, and also be involved in the progression of insulin-dependent diabetes in children".

But a European Food Safety Authority (EFSA) review, which canvassed the claims that milk containing A2 beta casein was less likely to cause health problems than the milk containing the A1 form, said different types of cow's milk were safe to drink and no one type of milk was safer than another.

The EFSA concluded that a formal risk assessment was not needed.

NZPA

Comments from our readers

No comments yet