The A2 Milk Company has admitted to a series of challenges facing its supply chain, as the business downgraded its financial forecast.
Updating the NZX, A2 said it is continuing to experience strong demand, particularly with its infant milk formula products in China.
But the company added that “the availability and cost of additional air freight required to accelerate product shipments to China is being indirectly impacted by the Middle East conflict”. At the same time, it said inventory levels have been low due to challenges at manufacturer Synlait Milk.
Synlait responded to this news, saying it has continued to work through supply chain impacts associated with its newly enhanced testing protocol for infant milk products.
These testing protocols come after stricter requirements for such products in China; A2 said it is also leading to longer clearance times for exports at customs.
“The factors outlined above have evolved rapidly,” A2 added. “They remain subject to uncertainty, particularly in relation to variability in freight and clearance assumptions, as well as additional indirect impacts that may flow from the Middle East conflict.”
Ahead of its full-year results for fiscal 2026, following guidance the company released on February 16, A2 Milk now expects its infant formula sales to be lower, supply chain costs to be higher, and a delay in fourth-quarter cash receipts into fiscal 2027.
It also expects revenue, EBITDA, and net profit after tax (NPAT) to all be lower than previously forecasted.
