a2 Milk Company Faces 14% Sales Decline in China Due to Supply Chain Issues

The a2 Milk Company encountered a significant 14% decrease in its China-label infant milk formula sales during the fourth quarter of 2026. This decline was attributed to severe supply chain disruptions, as reported in a supply chain update on the New Zealand Stock Exchange. These disruptions led to product shortages that affected the availability of a2's products in China.

Despite the challenges faced in China, the company's overall financial performance remained strong for the fiscal year 2026. Total revenue was projected to reach approximately $1.97 billion, marking a growth of over 12% compared to the previous year. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margins were also expected to be at the upper end of the forecast range of 14.0% to 14.5%.

The issues in China were primarily due to a combination of factors, including a surge in demand in the previous quarter, international freight challenges, and production backlogs at its partner, Synlait. These were further complicated by extended product release timelines and additional customs clearance protocols in China.

Outside of China, a2 Milk Company's other product segments, such as English-label infant milk formula and liquid milk, performed well, helping to balance the company's overall revenue. This diversification across product lines served as a buffer against localized issues.

Management has indicated that the primary causes of the distribution issues have now been largely resolved, with product flows returning to normal levels. The company is scheduled to publish its comprehensive financial results for 2026 on August 17, alongside a detailed operational outlook for the 2027 fiscal year.