A2 Milk Co. has warned of shortages of China-label infant formula, which have prompted the New Zealand business to lower the group’s sales and profit forecasts.
Fiscal 2026 sales across listed A2 Milk’s operations are now expected to rise by low-to-mid double-digit rates compared to a mid-double-digit increase provided in February, when the company raised its guidance.
Net profit after tax is likely to be “similar” or down on 2025 versus the previous forecast for a rise, while the EBITDA margin estimate was cut to 14% to 14.5% from 15.5% to 16%.
Last year’s net profit climbed 21.1% to NZ$202.9m ($118.3m) and the margin edged up 0.4 percentage point to 14.4%.
“The company is currently experiencing temporary in-market product availability issues primarily in relation to shortfalls of China label IMF [infant milk formula] product at distributors and retailers,” A2 Milk said in a stock exchange filing today (13 April).
“Strong” demand for China-label formula was one factor cited, supported by the global recalls made earlier this year by manufacturers such as Nestlé and Danone over the presence of the cereulide toxin.
However, other factors are also at play, including the “availability and cost of additional air freight required to accelerate product shipments to China” because of the Middle East conflict, the company said.
Added quality assurance testing for cereulide and enhanced border inspections are also slowing down supply.
Production issues at fellow New Zealand infant-formula business and A2 Milk supplier Synlait Milk were also cited.
“While production at Synlait has recently returned to target levels, there remains a significant backlog of unfilled purchase orders from Synlait with less capacity to catch up following the sale of its North Island assets,” A2 Milk noted, referring to the sale of assets last year to US-based Abbott Laboratories.
“The company is urgently working with its supply chain and distribution partners in New Zealand and China to expedite product flows to consumers as soon as possible. However, it is now expected that the above factors will materially impact China label IMF in-market product availability during 4Q26, mainly in April and May,” it added.
A2 Milk’s shares slumped on the announcement, closing down 12.4% at NZ$9.82 in New Zealand today (13 April). The dual-listed company also saw a decline on the Australia market, with shares ending trading 13% lower at A$8.04 ($5.67).
Synlait issued its own response to the A2 Milk citation, pointing to similar factors like the additional inspection times and supply chain impacts, throwing in the “movement of product globally, regulatory changes, and a challenging geopolitical and trading environment”.
A2 Milk added its English-label infant formula “is exposed” to the same factors as the China-label products. However, it said English label is “not expected to be as significantly impacted during this period”.
