CANBERRA — Australian dairy giant a2 Milk has upgraded its yearly revenue forecast on the back of strong sales in China.

In a statement issued on Wednesday, the company said it forecast revenues of $394 million for the financial year ending in June, up 49 percent from $265 million in the financial year ending in 2016.

The company generated sales of $291 million in nine months up to March 31 with third quarter infant formula sales exceeding expectations.

"Demand has been particularly strong in Australia, but also through the cross- border e-commerce channel into China," managing director Geoff Babidge told News Limited on Wednesday.

"On the assumption of continuing strong demand for a2 Platinum infant formula and production deliveries achieved consistent with the revised production schedule, the company is now expecting infant formula sales for the second half (of 2017) to exceed sales achieved in first half."

The news has been well received by investors who drove the company's share price up by 6 percent on Wednesday morning.

The stock price of the company has climbed 81 percent in the last 12 months to $2.2 per share.

The company confirmed on Wednesday that it would work closely with manufacturing partner Synlait Milk to increase supply for the last quarter of the financial year to "uplift the production schedule for the remainder of financial year 2017."