A2 Milk profit tumbles 44% after China formula shortage

A2 Milk reported a 44 percent drop in its full year net profit for the year ended June, aligning with its earlier forecasts. The decline was attributed to supply chain issues impacting its China label infant formula sales. Despite the setback, the company highlighted significant strides in its China growth strategy and supply chain transformation, following the acquisition of a2 Pōkeno.

Chairman Pip Greenwood noted that China & Other Asia segment sales rose by 11 percent, driven by the English label Infant Milk Formula (IMF) and other nutritionals. The USA segment revenue increased by nearly 29 percent, while Australia and New Zealand's revenue climbed by 10 percent, primarily due to growth in Australian liquid milk, both core and lactose-free.

The company expects revenue and EBITDA to grow in FY27, supported by product innovation, expansion into new markets, and profitability improvement in a2 Pōkeno. However, ongoing supply chain disruptions, particularly in China, are anticipated to gradually recover throughout FY27, with improvement expected in English label momentum during the first half of the year through heightened marketing efforts.