Shares of New Zealand dairy producer a2 Milk fell more than 10% in Monday trading after the company lowered its annual profit forecast and reported fiscal 2026 results below market expectations, as supply chain problems in its Chinese-label infant formula business intensified. The company said surging demand in the third quarter, production backlogs, and higher freight costs disrupted its delivery system, causing shortages of Chinese-label infant formula in the quarter ended June. That pushed existing customers to switch to rival brands, sending revenue from Chinese-label formula down 14% to 544.3 million New Zealand dollars for the year ended 30 June 2026. a2 Milk expects the impact to extend into fiscal 2027, forecasting revenue growth to slow to a mid-single-digit rate from 12.4% in fiscal 2026, while its margin is expected to be 15%, a significant decline compared with the first half ended December 2026. Analysts at Citi said recovery from the supply chain problems will take longer than expected, and the fiscal 2027 revenue target of only mid-single-digit growth is unimpressive relative to current valuation levels. Selling pressure drove a2 Milk shares down as much as 10.2% to 7.39 New Zealand dollars in early trading, the lowest since mid-June and the sharpest intraday drop since early May, while New Zealand's benchmark S&P/NZX 50 index fell just 0.5%. Net profit attributable to shareholders fell 44% to 113.6 million New Zealand dollars, missing the market consensus of 121 million New Zealand dollars, though underlying operating earnings still grew 7% to 235.8 million New Zealand dollars. The company also got a boost from strong in-store sales of English-label infant formula, which helped revenue from China and other Asian markets grow 11.2% to 1.45 billion New Zealand dollars. a2 Milk declared a final dividend of 9.5 New Zealand cents per share, down from 11.5 cents a year earlier.
Supply chain problems in Chinese-label infant formula caused shortages, pushing customers to rivals and cutting revenue.
