A2 Milk said its first-half result was in line with expectations as profit halved on skinnier margins, but it's more optimistic about the rest of the financial year.
The company said revenue for the six months to Dec 31 was $660.5 million, down 2.5% while net profit was $59.6 million, down 50.3%.
The company had said it expected revenue would be "marginally lower" on the year.
Looking ahead the company said its revenue outlook for the six months through June had improved. It was still expected to be significantly higher than in the second-half of the June 2021 financial year.
It noted, however, revenue improvement was not expected to translate into higher earnings as the company ramped up spending on its growth strategy.
The improved outlook for revenue in the second half should result in higher gross profit than previously expected.
However, this was likely to be offset by more expensive milk, ingredient and packaging costs.
The company expected second-half gross margin to be broadly similar to the first half, it said.
According to A2 Milk, it had moved into the execution phase of its growth strategy, which was “in its early stages and progressing well”.
Actions taken by the company to address excess inventory were also proving effective with channel inventory levels reducing to targeted levels, product freshness improving and market pricing increasing across English label and China label infant formula, it said.