A2 Milk shares were hit hard this morning after the company said it faced a tougher-than-expected first half due to reduced sales through a key channel
In an earnings update on the exchange, he said he expected first-half sales to be between $ 725 million and $ 775 million versus $ 805 million3 million a year earlier, with sales of USD 1 80 billion at $ 1 90b
A2 Milk said sales through the daigou channel – purchases made by Chinese visitors or businesses in New Zealand and Australia – have been halted due to border closures and Covid-19 lockdowns
He said Chinese consumers, who had purchased large amounts of infant formula when Covid-19 erupted, were also « de-stocking their pantries » – depleting their stocks
« This is currently expected to continue for the remainder of the first half of FY21, » the company said
Sales of the unofficial daigou channel to China represent a significant portion of infant formula sales in its Australia and New Zealand (ANZ) business
« As such, we now expect ANZ revenue to be significantly lower than forecast for the first half of the year, » he said.
Shares of A2 Milk, NZX’s second-most valuable company, fell 12% to five-month low
However, A2 said sales issues appear to be confined to the daigou channel alone as demand underlying consumer demand in China has remained strong
« We are of the opinion that this short-term impact on the Daigou Canal will prove to be temporary, assuming the stabilization of the issues related to Covid-19 in Australia »
He said sales of other products, including its liquid milk business in Australia and the United States, were strong, as were its local business in China.
Last month A2 posted a record annual profit of $ 386 million and also plans to take a controlling stake in southern region dairy company Mataura Valley Milk
The local sharing market fell this morning following a massive sell-off in US markets, triggered in part by negative data on the economic recovery
Specialty dairy company plans to take a 75% stake in Mataura Valley Milk as it seeks to expand its infant formula offering
The specialty dairy company reported annual profit of $ 385.8m, up from $ 287m last year
The a2 Milk Company, ASX, Turnover, New Zealand, Stock
World News – AU – A2 Milk shares drop 12% to their highest low level in five months
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