A2 Milk signals a 14% year-on-year drop in China-label infant milk formula sales, a setback that flows directly into its full-year earnings. Management links the fourth-quarter shortfall to supply chain friction rather than demand collapse, pointing to freight disruptions, longer customs clearance and tougher product testing in China. Stronger than usual demand in the previous quarter also pulled forward sales, adding to the decline in the latest period. The company leans on the rest of its portfolio to keep growth on track.
The dairy group highlights robust performance from its English-label infant milk formula along with ongoing gains in nutritional powders and liquid milk. These segments all beat their prior corresponding period, balancing the China-label weakness.
That strength allows A2 Milk to upgrade full-year revenue guidance to $1.9 billion, representing 12% growth on the previous year. Earnings quality also improves, with the company expecting its EBITDA margin to sit at the top end of its 14% to 14.5% target range.
Profit expectations move higher alongside revenue and margins, with net profit after tax now projected to come in slightly above FY25 levels. Cash generation looks materially better too, with cash conversion forecast around 70% compared with earlier guidance closer to 50%.
Those metrics suggest the business is turning more of its earnings into cash, even in the face of operational challenges in a key market. Investors focused on China risk now have a clearer sense of how diversified product and channel exposure cushions the impact.
