A2 Milk Sales Disrupted by Victoria Pandemic Restrictions

Marco Green
September 28, 2020

First-half revenue was forecast at NZ$725 million to NZ$775 million. That would result in "materially below plan" sales for New Zealand and Australia in the first half, it said.

Mark Lister, head of research at Craig Investment Partners, said the revised outlook was not awful "because the company's obviously growing strongly".

The company said disruption in the daigou channel had affected sales in September "and it is now anticipated that this will continue for the remainder of the first half of FY21".

Greater demand should return in the second half.

"This disruption in the daigou channel is impacting our September sales and it is now anticipated that this will continue for the remainder of the first half of the 2021 financial year".

New Zealand's a2 Milk Co Ltd forecast lower first-half revenue on Monday as lockdown measures in Australia's Victoria state hurt its informal Chinese sales channel more than expected, sending its shares down more than 14 per cent.

"The performance in all other areas of our business is strong, including our liquid milk businesses in Australia and the USA".

Another drag on the first half was the effect of pantry "destocking, " which was expected after strong pandemic sales earlier this year.

At its last result, the company noted that there continued to be uncertainty resulting from Covid-19 and the potential for the moderation of economic activity and that this could have various impacts, including on participants within the supply chain.

It added that demand for its International Monetary Fund brand in China was still solid and expected full-year revenue between NZ$1.80 billion and NZ$1.90 billion, higher than last year's figure of NZ$1.73 billion but still below Refinitiv estimates of NZ$2.07 billion.

Group earnings before interest, tax, depreciation and amortisation (Ebitda) were expected have a margin of around 31 per cent.

Shares finished the session down 7.61 per cent to $5.22. "It's still been a good performer".

Other reports by Click Lancashire

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