Struggling milk and infant formula seller A2 Milk has been forced to slash its sales and profits forecasts after a weaker-than-expected performance in the Chinese market | domp
Struggling milk and infant formula seller A2 Milk has been forced to slash its sales and profits forecasts after a weaker-than-expected performance in the Chinese market and a writedown of up to $90 million in the value of its inventory.
“It is clear that the actions taken to address challenges in the Daigou and CBEC channels will not result in sufficient improvement in pricing, sales and inventory levels to meet our previous guidance.“: a2 Milk CEO David Bortolussi.Shares in the company fell as much as 15.5 per cent on Monday morning to a three-and-a-half-year low of $5.93 as the business also announced its longstanding head of Asia Pacific has also resigned from the business.
Further to this, A2 also underwent a review of its inventory through its daigou channel, which revealed that the company’s inventory levels were higher than expected and some of the product was close to being out-of-date, prompting an $80 million to $90 million writedown in the value of its inventory.
These issues means A2’s revenue for fiscal 2021 is now expected to fall between $1.2 billion and $1.25 billion, a $200 million to $150 million drop on its forecast at its half-year results.
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