A hefty profit downgrade by Synlait Milk in NZ prompted a statement by its large infant formula customer the a2Milk Company saying that its own profit forecasts are still intact.
Tensions have arisen behind-the-scenes between the duo. The a2 Milk Company owns almost 20 per cent of Synlait and the two groups have had a manufacturing partnership since 2012.
The daigou reseller market for infant formula in Australasia has fallen substantially but the a2 Milk Company says sales of China-labelled tins are growing strongly.
Infant formula group the a2 Milk Company says it is “surprised” by the size of a profit downgrade by its contract supplier Synlait Milk, as behind-the-scenes tensions escalated between the two groups which have had a partnership for a decade.
The a2 Milk Company, which has taken investors on a rollercoaster ride where its shares were as high as $19.83 in June 2020 and then slipped to $4 in May last year, owns nearly 20 per cent of New Zealand-based Synlait, which supplies its infant formula.
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Simon Evans writes on business specialising in retail, manufacturing, beverages, mining and M&A. He is based in Adelaide. Connect with Simon on Twitter. Email Simon at simon.evans@afr.com
