A2 Milk downgrades FY26 guidance as Middle East conflict sparks supply chain issues
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The news: Dairy producer A2 Milk has downgraded its FY26 guidance due to supply chain issues related to the conflict in the Middle East.
The numbers: A2 Milk now expects full-year revenue growth of “low to mid double-digit percent” compared to FY25, changed from “mid double-digit” percentage growth.
The company guided its EBITDA margin to be 14% to 14.5%, down from its previously stated ban of 15.5% to 16%.
Net profit after tax is expected to be “similar to down” on FY25, having previously guided for a year-on-year improvement.
The context: A2 Milk said it is experiencing temporary product availability issues, primarily driven by shortfalls of China label infant milk formula (IMF) product at distributors and retailers.
The company said the availability and cost of additional air freight to accelerate product shipments to China is being “indirectly impacted” by the Middle East conflict, with uncertain capacity allocations for sea freight.
A2 Milk’s latest FY26 outlook, provided at the time of its half-year results announcement in February, has changed. It now expects lower IMF sales mostly related to China label sales, additional one-off supply chain costs, and a delay in cash receipts into FY27 due to the later timing of IMF sales in the fourth quarter.
The company noted that a “range of key risks could materially impact expected revenue and earnings outcomes”, with uncertainty posed by variability in freight and clearance assumptions, as well as further indirect impacts flowing from the Middle East conflict.
The source: ASX
