a2 Milk FY profit slumps 44% on China supply disruptions

New Zealand-based dairy company a2 Milk reported a significant 44% drop in its full-year profit for the year ending June 30, 2026, according to its latest earnings release. The net profit attributable to shareholders fell to NZ$113.6 million, a stark contrast to the NZ$202.9 million earned in the previous year. The decline was primarily attributed to supply chain issues that led to a shift in customer preferences towards competing infant milk formula brands, especially in a2 Milk's largest market, China.

Revenue from China-label infant milk formula sales dropped by 14% to NZ$544.3 million, reflecting the impact of the supply disruptions. The company attributed the decline in sales to strong demand in the third quarter, production backlog, and higher freight costs, which collectively caused product shortages during the fourth quarter of 2026. These shortages necessitated a significant switch among existing users to alternative brands, as they depleted their pantry stock.

Despite the challenges, a2 Milk stated that stock levels had since improved, and the company is actively working to regain customers and attract new buyers. On an underlying basis, the company reported a full-year profit of NZ$235.8 million, representing a 7% increase compared to the previous year. In terms of revenue, the company's largest market, China and other Asia, saw an 11.2% growth, reaching NZ$1.45 billion. This growth was driven by higher sales of English-label infant milk formula products.

The company also declared a final dividend of 9.5 New Zealand cents per share, a decrease from 11.5 cents paid the previous year. This report, generated with the assistance of AI and reviewed by an editor, provides a comprehensive overview of a2 Milk's financial performance and strategic response to the supply disruptions in its key market.