September 30, 2020

 

a2 Milk New Zealand projects lower revenue due to disrupted Chinese sales


 

New Zealand's a2 Milk Co Ltd projected lower first-half revenue after Australia's Victoria state lockdown measures affected its informal Chinese sales channel, plunging it shares by 14%, Reuters reported.

 

A large portion of a2 Milk's sales come from the "daigou" channel, where shoppers in China buy its products in bulk overseas and informally import them. These represent a major revenue stream for the company's infant milk formula (IMF) in Australia and New Zealand.

 

The company said it's "daigou" network had already been disrupted due to lower numbers of Chinese tourists and international students, and now projects these disruptions to continue through the first fiscal half of next year. 

 

a2 Milk's forecast revenue for the six months ended December 2020 is between NZD 725 million (~US$474.95 million; NZD 1 = US$0.66) and NZD 775 million (~US$512 million), compared to NZD 806.7 million (US$533 million) one year ago.

 

The company's shares dropped 14.9% after the announcement.

 

a2 Milk said demand for its IMF brand in China remained strong and projects full-year revenue between NZD 1.80 billion (~US$1.18 billion) and NZD 1.90 billion (~US$1.25 billion). This is higher than 2019's NZD 1.73 billion (US$1.14 billion) but below estimates of NZD 2.07 billion (~US$1.36 billion) by Refinitiv.

 

-          Reuters