A2 Milk Company: Baby formula channel to China disrupted, leading to revised figures
The A2 Milk Company’s shares plunged more than 10 per cent today as it revealed a supply channel had been blocked due to coronavirus restrictions.
CORONAVIRUS restrictions in Victoria have blocked a rich revenue vein for A2 Milk, leading to the processor to revise down its projected sales figures.
The New Zealand-based company’s shares plunged more than 10 per cent today after it reported lower than anticipated sales to ‘daigous’ – people who go abroad to buy products, then resell them back to China – so far this financial year.
A2 Milk chief executive Geoff Babidge said the blockage in the daigou supply chain was only temporary.
In an update to the Australian Securities Exchange on Monday, Mr Babidge forecast first-half revenue of $NZ725 million ($A674 million) to $NZ775 million ($A720 million), down from $NZ805 million ($A748 million) for the same timeframe last year.
“We are of the view that this short-term impact to the daigou channel will prove to be temporary, assuming stabilisation of COVID-19-related issues in Australia,” he said.
“Performance in all other areas of our business is strong, including our liquid milk businesses in Australia and the USA.
“Importantly, our local China business is performing strongly, notably in mother and baby stores, which we anticipate will continue.”
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