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Speaker 1: Good day for A two milks shareholders. Company posts two

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Speaker 1: hundred million dollar profit for twenty five announced they're getting

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Speaker 1: ready to turbocharge production. This is the purchase of a

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Speaker 1: plant in Polcino. This is for three hundred million bucks.

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Speaker 1: Pocono plant has two registrations to sell infant formula in China.

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Speaker 1: This isn't clearly an area that A two sees as

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Speaker 1: a growth market. Matt's Montgomery is Forsith Bar analyst with

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Speaker 1: me this morning. Matt, good morning, Good morning Roan. Thanks

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Speaker 1: having great to have you here, this market reaction, some

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Speaker 1: strong results for them, and also a lot of trust

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Speaker 1: in their management here obviously.

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Speaker 2: Yeah, that's right. I think in the context of numerous

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Speaker 2: New Yealand corporates over the last couple of years, A

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Speaker 2: two it has stood out, I mean, consistently exceeding expectations

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Speaker 2: despite your operating in what is a relatively tough formula

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Speaker 2: market in China. And you know, the decision is today

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Speaker 2: to acquire the plants in Pocono sort of one quite

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Speaker 2: big step in continuing that growth pathway.

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Speaker 1: You said, it's a tough market for infant formula in China.

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Speaker 1: They've got an aging population. Is this a growth market.

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Speaker 2: Well, the market itself is flat to slightly down at

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Speaker 2: the present time, but birth rates did increase last year,

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Speaker 2: so you're seeing a little bit of an air pocket

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Speaker 2: of growth in the very short term. But Eights have

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Speaker 2: been taking markets share consistently across both their Chinese and

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Speaker 2: English label formula products. So the market itself is relatively challenging,

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Speaker 2: but their execution has been very impressive for a few years. Now.

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Speaker 1: Can you sell milk to the old aging population?

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Speaker 2: Well, they have been diversifying the business. So if you

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Speaker 2: think back five years ago, it was principally an formula

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Speaker 2: play in China, but they have been diversifying the business

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Speaker 2: into other nutritionals. So this is selling senior milk powers

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Speaker 2: and that's been and growing at sort of thirty percent plus.

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Speaker 2: So you're trying to stretch the brand, I guess if

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Speaker 2: you will into other skews smaller today, but you know

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Speaker 2: another small growth angle for their business.

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Speaker 1: Chunk of change they paid for Pocono.

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Speaker 2: Yeah, two eighty two as it value was around two

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Speaker 2: point fifty. But you know the company reported net cash

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Speaker 2: of just over a billion dollars yesterday, so they haven't

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Speaker 2: been short of change. And that's allowed them to return

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Speaker 2: a three hundred million dollars special dividend to shareholders yesterday,

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Speaker 2: and we see the scope for more distributions to shareholders

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Speaker 2: over the next few years. So yeah, the free cancelor

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Speaker 2: generation and the business over a long time has allowed

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Speaker 2: them to be in this position.

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Speaker 1: Good to seeing ambitious company well run.

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Speaker 2: Yes, indeed management's doing a good job.

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Speaker 1: Matt, appreciate your time. Matt Montgomery for sith Bar Senior

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Speaker 1: arounds with me on A two this mornth For more

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Speaker 1: from early edition with Ryan Bridge.

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