New Zealand-based The a2 Milk Company has issued a profit warning after ongoing supply chain disruptions and tightening regulatory requirements hindered shipments of its China-label infant milk formula, its most critical market.
The company downgraded its FY2026 outlook, now expecting only low-to-mid double-digit revenue growth—down from earlier mid-double-digit projections—while net profit is forecast to be flat or lower compared to FY2025, reversing earlier expectations of growth. Margins are also expected to shrink to around 14–14.5%, with cash conversion dropping sharply to nearly 50% from a previously anticipated 80%. (The Australian)
The disruption stems from a combination of factors, including freight constraints, high air freight costs, limited sea freight capacity, and geopolitical tensions impacting logistics, alongside stricter Chinese regulatory checks and extended customs clearance processes.
Earlier manufacturing challenges at Synlait’s New Zealand facility created low inventory levels and a backlog of unfulfilled orders, further tightening supply availability. As a result, shortages of China-label infant formula are expected to persist through April and May, directly impacting sales volumes in mainland China. (thecattlesite.com)
Despite strong underlying demand in China, supply bottlenecks have constrained the company’s ability to capitalize on market opportunities, with distributors facing stock shortages. (Finimize) The company also flagged one-off supply chain costs and delayed cash flows into FY2027, highlighting ongoing operational pressure.
While shares have dropped by around 13–17% following the announcement, analysts suggest the challenges may be temporary, with long-term demand fundamentals in China remaining intact. (The Australian)
Source: Dairynews7x7 14 April, 2026 Read full story here
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