• Thorn Law has lodged a class action proceeding against a2 Milk in the High Court of New Zealand with similar allegations to the two filed in Australia.
    Thorn Law has lodged a class action proceeding against a2 Milk in the High Court of New Zealand with similar allegations to the two filed in Australia.
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The a2 Milk Company is facing another class action, with Shine Lawyers lodging its claim in the Victorian Supreme court. It is the second action brought against the company in relation to its poor economic performance.

Slater and Gordon filed its class action in October. Kaitlin Ferris from Slater & Gordon said a2 Milk was or ought to have been aware that its FY21 guidance didn’t adequately consider factors that were likely to have an impact on the company’s financial performance.

Shine Lawyers class actions practice leader Craig Allsopp said investors had a right to recover the losses they experienced between 19 August 2020 and 7 May 2021. Allsopp said that A2 Milk may have breached the Corporations Act by engaging in misleading and deceptive conduct.

“Our claim alleges that a2 Milk had predicted its baby formula would have a high sales performance in FY21, contributing to a 30 per cent boost to its earnings before interest, taxes, depreciation, and amortisation, but the forecast was misleading and caused our clients significant financial loss,” he said.

At the end of FY21, the company reported earnings 20 per cent lower than predicted, resulting in a 62 per cent drop in the share price.

Allsopp: “We believe a2 Milk did not reasonably predict its profit margin and should have known that its expected earnings were not going to be achieved in that fiscal year.

“In our view, this may have constituted a breach by a2 Milk of its continuous disclosure obligations for failing to inform shareholders of its future trade plans.

“A2 Milk tried to increase sales performance by advertising its English label baby formula online but this plan failed, instead causing a decline in sales among Daigou or Chinese consumers in Australia who purchase baby formula in Australian stores and post it to family overseas,” he said.

A2 Milk said it had complied with its disclosure obligations “at all times” and denied any liability. It would vigorously defend proceedings, it said.

 

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