A2 Milk shares bucked the sell-off, jumping strongly after delivering a better than expected result for the 2022 financial year given challenging market conditions. Group revenue rose +20% from last year while operating earnings (EBITDA) lifted +47% from last year to $196.2m. Better inventory management saw gross margins normalise (following the previous year's write-off), while profit growth was limited to increased marketing spending, which appears to continue to rise to achieve modest revenue growth. The surprise was how well China infant formula performed despite macro headwinds as birth-rate in China slumping -11.5% in 2021 and is expected to fall further in 2022 – the decline was partially offset by an increase in household penetration and consumption within the infant formula market. Strong cashflow generation and profitability in the past means A2 Milk is currently sitting on $816.5m cash on hand, with management announcing an on-market share buyback of $150m - was well received by the market.