a2 Milk expects China constraints but maintains long-term growth outlook
The a2 Milk Company said logistics problems that affected Chinese distribution in the fourth quarter would continue to weigh on performance in FY27. Its China-label infant milk-formula sales fell by 14% during the period after products became unavailable in stores. The company expects revenue in the first half of FY27 to be relatively flat and has forecast growth in the mid-single digits for the full financial year.
The disruption reduced stock held across the distribution network during April and May. The company attributed it to simultaneous pressure on air and sea freight, production backlogs at Synlait, its primary processing partner, and tighter border inspections in China. Retail offtake is currently about 40% of the level recorded before the disruption. Management expects commercial activity to return to normal run rates by the end of FY27.
David Bortolussi, the company’s managing director and chief executive, said consumer demand for nutrition based on A2 beta-casein remained structurally intact. He outlined a recovery plan centred on restoring availability, rebuilding the brand’s retail presence and introducing additional products under China-label registrations.
The company expects an EBITDA margin of about 15% in FY27, compared with a normalized margin of 16.6% in FY25. Chief financial officer David Muscat said the reduction would mainly reflect pressure on gross margin rather than higher administrative or promotional spending. Raw-milk costs, dairy-ingredient prices—particularly for whey and lactose—and changes in product mix are expected to affect profitability while production volumes remain below target.
A major operational change is scheduled at the Pōkeno plant in New Zealand’s North Island, which a2 Milk acquired and began integrating during FY26. The facility recorded an initial EBITDA loss of $23.2m during that integration period. The company expects Pōkeno to reach EBITDA breakeven in FY27 and to manufacture two new China-label infant-formula products, whose launches are scheduled for the first half of the financial year.
Producing those products at Pōkeno will increase use of the facility and reduce the company’s reliance on external manufacturing capacity. The company held $784.5m in net cash at the relevant reporting point. It said its plans also include expanding its nutritional-product portfolio in Asia and North America while its internal manufacturing operations are developed.
