While The a2 Milk Company (a2MC) grew revenue 12.4 per cent to $1.97 billion in FY26, its reported EBITDA and net profit both went backwards due to stock issues in Q4 with its China label infant formula driving consumers to switch brands.
Reported EBITDA fell 2.5 per cent to $284.4 million and net profit after tax fell 5.8 per cent to $207.5 million. Excluding losses at the newly acquired a2 Pōkeno plant, underlying EBITDA was up 5.4 per cent to $307.6 million and underlying NPAT was up seven per cent to $235.8 million.
Snapshot
|
Continuing operations (NZ$m) |
FY26 |
FY25 |
Change |
|
Revenue |
1,974.9 |
1,757.2 |
12.4% |
|
EBITDA |
284.4 |
291.7 |
(2.5%) |
|
Underlying EBITDA |
307.6 |
291.7 |
5.4% |
|
NPAT |
207.5 |
220.3 |
(5.8%) |
|
Underlying NPAT |
235.8 |
220.3 |
7.0% |
|
Net cash |
784.5 |
1,061.2 |
(26.1%) |
|
Ordinary dividend (cps) |
21.0 |
20.0 |
1.0cps |
All figures in New Zealand dollars.
Supply shortage
The company said the causes of the lack of stock were cumulative, including unusually strong demand in the preceding quarter, air and sea freight constraints, a production backlog at contract manufacturer Synlait, extended product release times due to enhanced testing, and additional customs clearance and testing requirements.
A2MC managing director and CEO, David Bortolussi, said, “While our China label infant milk formula performance was impacted by product availability issues late in the year, the key contributing factors have been resolved, and we are focused on executing our recovery plan.”
The financial impact was concentrated, with China label IMF falling 14 per cent to $544.3 million across the year – 6.5 per cent in 1H26 and 33 per cent in the second half down.
In terms of market share, on a moving annual basis, the company held a seven per cent share of Mother and Baby Stores in Key and A cities, but in 4Q that share was 2.1 per cent and its domestic online share was 1.8 per cent.
The disruption also carried one-off supply chain costs that fed into a gross margin of 47.7 per cent, down 3.4 percentage points.
In-house production
Since a2MC acquired the a2 Pōkeno nutritional facility and divested Mataura Valley Milk earlier in FY26, it has more than doubled the Pōkeno team and spent $51.6 million as part of a multi-year capital program of about $100 million. Total capital expenditure was $86.4 million.
Pōkeno recorded an EBITDA loss of $23.2 million and an NPAT loss of $28.3 million, which the company attributes to low production volumes ahead of transition plus one-off transaction, separation and integration costs. Those losses were the gap between reported and underlying earnings.
In FY27, the company will bring a2 Platinum production inhouse from Synlait, including formulation and packaging changes. It has started production of two new China label products at Pōkeno after securing registration amendments.
Australian liquid milk carries ANZ
The ANZ segment posted revenue of $348.2 million, up 10.2 per cent, with EBITDA of $60.7 million, up 5.5 per cent.
Australian liquid milk rose 17.2 per cent to $244.9 million on growth in both the core range and lactose free, helped by currency translation. Value share rose 0.5 percentage points to 11.7 per cent, and a2 Milk Lactose Free hit a record 22.6 per cent MAT value share, with the brand launching in Coles in Western Australia.
ANZ infant formula went the other way, down 8.6 per cent to $73.7 million on lower Daigou channel sales, with a2 Gentle Gold still growing in Australian retail.
The company was the first dairy milk partner of the Australian Open, using the AO26 campaign for sampling across a venue audience it puts at more than 1.3 million.
Other Nutritionals and the US
Other Nutritionals is the fastest growing part of the portfolio, up 42 per cent excluding Pōkeno external ingredient sales of $23.8 million, and up 59.9 per cent including them.
Within the China and Other Asia segment the category grew 71 per cent to $188.6 million on kids and seniors fortified milk powders, a new kids fortified UHT launched through Costco, and the a2 Zhi Yi paediatric supplements range.
The category proved useful during the stockout, with the kids fortified milk powder substituting for Stage 3 and Stage 4 China label formula users.
The US grew revenue 28.6 per cent to $179 million and reached breakeven in the second half, narrowing its EBITDA loss to $3.4 million from $9.3 million. The company completed a voluntary recall of limited US label infant formula batches in 4Q26. It says the recall was isolated to US label product with a different formulation, but a2 Platinum offtake in China was indirectly hit anyway, which is a useful reminder of how far a recall travels beyond the SKU it covers.
Outlook
For FY27, the company guides to mid-single digit revenue growth and an EBITDA margin of about 15 per cent, with both revenue and earnings materially weighted to the second half. First half revenue is expected to be broadly in line with 1H26 and first half EBITDA materially down on it. IMF sales are expected to be broadly similar to FY26, with China label recovering gradually across the year.
“Despite the impacts of supply chain disruption, we are expecting mid-single digit percent revenue growth and improved earnings next year supported by the robustness of our business model and growth strategy,” Bertolussi said.
