a2 Milk cuts FY26 profit view as supply snags hit China formula sales (updated)

A2 Milk

12/04/2026 22:53

Sees FY26 profit below or in-line with FY25

Lowers revenue growth guidance

Shares mark worst day since mid-August 2024

Updates throughout, adds analyst comments, closing share price

April 13 (Reuters) - New Zealand's a2 Milk ATM.NZ slashed its fiscal 2026 profit guidance on Monday, citing temporary supply chain disruptions that have constrained the availability of its China-label infant milk formula, sending its shares to a more than two-month low.

Shares of the company closed down 12.4% at NZ$9.82, the lowest close since late January and the biggest daily decline since mid-August 2024.

a2 Milk said in-market availability of its China-label infant milk formula has been hit by low inventory levels, strong demand and higher freight costs since the conflict erupted in the Middle East.

As a result, the company now expects full-year 2026 net profit after tax to be broadly in line or below the NZ$202.9 million ($117.5 million) reported in fiscal 2025, having previously forecast growth from the prior fiscal.

It also cut full-year revenue growth guidance to the low- to mid-double-digit range from a mid double-digit outlook, and trimmed its operating earnings margin outlook to 14.0%-14.5% from at least 15.5% previously.

A2 Milk said supply chain disruptions would materially hit China-label infant formula availability in the fourth quarter of fiscal 2026, mainly in April and May, despite efforts to accelerate shipments with partners in New Zealand and China.

"It is early days, but should these supply challenges persist for some time, it may reignite the debate as to whether a2 should be manufacturing in-country in China," Citi analysts said.

The company flagged past manufacturing challenges at Synlait Milk SML.NZ - in which it owns a nearly 20% stake - as a contributing factor to product shortages, adding that although production had recently returned to target levels, a "significant backlog" remained.

In a separate statement, Synlait said it was rebuilding inventory and managing supply chain disruptions, but enhanced testing were delaying product release times and impacting capital needs.

($1 = NZ$1.7265)

 (Reporting by Jasmeen Ara Shaikh and Shruti Agarwal in Bengaluru; Editing by Edmund Klamann, Chris Reese and Sumana Nandy)

 ((Shruti.Agarwal@thomsonreuters.com;))