A compounding set of supply chain disruptions is expected to materially impact The a2 Milk Company’s China label infant formula availability through April and May, with the company warning its FY26 earnings guidance will fall short.
The company disclosed the update in an NZX/ASX market release on 13 April 2026, citing five concurrent factors: strong demand, freight disruptions linked to the Middle East conflict, residual production backlogs at Synlait, extended quality assurance release times tied to new cereulide testing standards, and increased customs clearance requirements in China.
Managing director and CEO, David Bortolussi, said demand for the a2 brand remained strong across all product categories and regions in the third quarter of FY26, with offtake trends similar to or better than those recorded in the first half. China label a2 至初 infant milk formula (IMF) demand benefited from early-stage new user recruitment supported by the My Little Pony marketing campaign, while later stage growth reflected prior period share gains and the success of the company’s new kids’ nutrition product.
The Synlait dimension is a recurring pressure point for a2MC. The relationship between the two companies has been turbulent: a2MC cancelled Synlait’s exclusive manufacturing rights for its Stages 1-3 China and English label IMF products with effect from 1 January 2025, and the two parties reached a conditional settlement in 2024 that included a one-off NZ$24.75 million payment from a2MC.
Synlait subsequently sold its North Island assets, including the Pŋkeno manufacturing facility, Auckland blending and canning operations, and a leased warehouse to Abbott Laboratories for NZ$307 million, completing the transaction in early April 2026.
That divestment has now directly curtailed Synlait’s ability to clear the backlog of unfilled purchase orders it holds for a2MC. While the company says Synlait’s South Island production at Dunsandel has returned to target levels, reduced overall capacity means less room to catch up.
Separately, new cereulide testing requirements affecting ingredient suppliers and manufacturers are extending QA release timelines, and China’s customs authority is applying higher inspection and sampling rates across the industry.
English label IMF, including the a2 Platinum and a2 Genesis ranges, is less exposed to the disruption, though the company noted that a2 Genesis – which accounts for roughly six per cent of cross-border e-commerce (CBEC) sales – faces near-term availability constraints due to high demand. That shortfall is expected to resolve once production resumes at a2 Pŋkeno following planned canning line capital works. The company said its supply chain transformation programme at a2 Pŋkeno remains on track, with a production ramp-up expected in the first half of FY27.
The cumulative effect of the disruptions has prompted a formal downgrade to FY26 guidance. The company now expects revenue growth of low to mid double-digit per cent versus FY25 (previously mid double-digit), with EBITDA margin of approximately 14.0 to 14.5 per cent (previously 15.5 to 16.0 per cent). NPAT is now expected to be similar to or below FY25’s reported $203 million (previously forecast to be up on FY25). Cash conversion is expected to fall to approximately 50 per cent, against a prior guidance of 80 per cent, reflecting delayed cash receipts as IMF sales shift into FY27.
Despite the downgrade, the company said it intends to maintain brand investment in the fourth quarter to support long-term growth. Bortolussi noted the supply chain factors were primarily timing-related and characterised as one-off in nature, though their proximity to financial year-end limits the scope for mitigation.
FY25 continuing operations revenue was $1,757 million.
