The a2 Milk Company FY26 Results Show 12% Revenue Growth and Margin Pressure

a2 Milk delivers double-digit revenue growth as supply chain disruption weighs on second half

In its FY26 annual results presentation, dated 17 August 2026, a2 Milk Company revealed revenue rose 12.4% to NZ$1,974.9 million for the 12 months ended 30 June 2026, with growth recorded across every geographic and product segment. Reported EBITDA eased 2.5% to NZ$284.4 million (underlying EBITDA up 5.4% to NZ$307.6 million), while NPAT declined 5.8% to NZ$207.5 million (underlying NPAT up 7.0% to NZ$235.8 million).

The company declared a NZ$300 million special dividend alongside an increased full-year ordinary dividend of 21.0 cents (approximately 74% payout). Management attributed the second-half earnings pressure to a temporary 4Q26 China label supply chain disruption, now resolved, with recovery actions underway. The results landed in line with, or slightly ahead of, the updated April guidance.

FY26 results at a glance

Management distinguished reported figures from underlying results, which exclude a2 Pōkeno losses and one-off transformation costs. All financials are on a continuing operations basis, excluding Mataura Valley Milk (MVM).

Shareholder returns disclosed in the presentation included:

• Final FY26 dividend of 9.5 cents per share

• Total ordinary dividends of 21.0 cents (up 5.0%, approximately 74% payout)

• Special dividend of NZ$300 million declared

• No external debt at 30 June 2026

Growth across every geographic and product segment

The presentation detailed growth across all regions. China & Other Asia sales rose 11.2% to $1,447.6m, led by English label IMF and Other Nutritionals. ANZ sales grew 10.1% to $348.2m, driven by Australian liquid milk. The USA segment recorded sales up 28.6% to $179.0m and achieved EBITDA breakeven in 2H26 for the first time.

By product, IMF sales rose 4.7%, with English label up 23.2% offsetting a 14.0% China label decline linked to the disruption. Liquid Milk grew 21.8% (ANZ +17.2%, USA +28.9%), while Other Nutritionals climbed 59.9% (42.3% excluding a2 Pōkeno ingredient sales).

Management noted that new products introduced in recent years contributed over 50% of FY26 sales growth, reducing single-product dependence.

Understanding the 4Q26 supply chain disruption

The company’s premium China label IMF (a2 至初™) briefly ran short of stock in China during 4Q26 (April to June 2026). Infant milk formula, or IMF, is powdered nutrition designed to meet the dietary needs of infants.

Management outlined five contributing factors:

1. Strong demand in the preceding quarter drawing down stock

2. Air and sea freight constraints, indirectly linked to Middle East disruption

3. A Synlait production backlog

4. Extended product release times due to enhanced testing

5. Additional customs clearance requirements and testing measures

For investors, the shortage forced some existing customers to switch brands as they ran out of pantry stock, denting China label market share in 4Q26. Kantar MAT share fell from 5.6% in Mar-26 to 5.2% in Jun-26, with Nielsen and Smart Path data indicating sharper 4Q26 declines. The company stated all contributing factors are now resolved, with product availability significantly improved.

The April guidance downgrade cut EBITDA margin expectations to 14.0%-14.5% and slashed cash conversion guidance to approximately 50%, with management framing the disruption as a timing issue rather than a structural demand problem.

Recovery is underway with early signs of momentum

The presentation detailed a four-pillar recovery plan, emphasising actions already delivered:

1. Rebuild trust — launched a market-leading traceability tool with batch-by-batch testing in mid-June, supported by Xinhua News and Daddy Lab endorsement campaigns

2. Drive recruitment — past-user win-back programmes and an enhanced loyalty programme

3. Support ecosystem — maintaining distributor stability and controlled distribution expansion

4. Launch products — two new China label IMF products in 1H27

Management reported that new user recruitment conversion rates have returned to or exceeded historical levels, with offtake expected to gradually recover over FY27.

Brand sentiment recovery

“Positive brand sentiment quickly recovering to prior levels based on comprehensive social listening.”

Ipsos social listening tracking showed positive social sentiment rising from 26% (1H May-26) to 58% (2H Jul-26).

Innovation and new markets driving the next leg of growth

Product innovation ramping up

New products introduced in recent years contributed over 50% of FY26 sales growth. FY27 launches include two new China label IMF products (a2 至初启润™ and organic a2 至初至淳™), plus major updates to a2 Platinum™ and a2 Genesis™. The a2 Platinum™ update is its first major refresh since 2022. A new English label paediatric supplements range, Australian-made to TGA standards, is planned for 1H27.

New markets scaling

Vietnam English label IMF sales grew 200%, with distribution expanded to over 3,500 mother and baby stores. Planned expansion includes Singapore, Indonesia (2H27, subject to registration), the Philippines and Malaysia, alongside formulation work for Saudi Arabia and the UAE.

Scientific credibility

The USA Growth Monitoring Study, a key requirement for the FDA’s New Infant Formula Notification process, was completed across 156 healthy full-term infants. The formula demonstrated appropriate growth and safety, with 6.6% greater length gain and 6.0% greater weight gain versus a conventional A1/A2 comparator.

Supply chain transformation on track at a2 Pōkeno

The acquisition of a2 Pōkeno and divestment of MVM were completed earlier in FY26, as announced in August 2025. The company spent $51.6 million in FY26 of an approximately $100 million multi-year capital investment programme, delivered on time and on budget.

The a2 Pōkeno team has more than doubled since acquisition, and two new China label registration amendments were secured. a2 Platinum™ is to be insourced from Synlait during 1H27, delivering vertical margin capture. Management noted a2 Pōkeno is on track for EBITDA breakeven in FY27, with profitability expected by FY28. Greater supply chain control allows the company to insource a2 Platinum™ production from Synlait.

FY27 outlook and the path to the $2 billion revenue ambition

Management provided the following FY27 guidance, compared to FY26 on a continuing operations basis:

• Revenue growth of mid single digit percent, with 1H27 revenue broadly in line with 1H26 (results materially weighted to 2H27)

• EBITDA margin of approximately 15%, with 1H27 margin materially down on 1H26

• IMF sales broadly similar to FY26 as China label gradually recovers

• Cash conversion of approximately 70-80%; capital expenditure of approximately $70 million

• Depreciation and amortisation of approximately $20 million

The company stated it expects to reach its $2 billion revenue ambition by FY27, in line with the previously amended plan. An update on the IMF recovery plan is due at the Annual Meeting on 19 November 2026.

The company enters FY27 with no external debt and a strong cash position, returning capital via the $300 million special dividend, supported by a diversifying product base and a stated line of sight to its $2 billion target.

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