A2 Milk has slashed its sales and earnings forecasts, wrote down $90 million in nearly out-of-date stock and announced its longstanding head of Asia Pacific had resigned from the business
Struggling milk and infant formula seller A2 Milk has ruled out cutting its exposure to the Chinese market despite concerns over growing political tensions and weaker-than-expected sales into the region.
“The China market opportunity for us in infant formula ... is the number one priority for developing the business going forward,” he said. “Essentially, we are a New Zealand company with product that we export for cross border or domestic business into the China market.” 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 told investors while its third-quarter sales had been in line with expectations, its efforts to boost the daigou channel would not result in the previously forecast uptick in sales through the fourth quarter. They closed Monday’s session 13.1 per cent weaker at $6.10.
However, these issues mean 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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