a2 warns on China disruption

a2 warns on China disruption

Dairy
WARNING: A2 Milk chief executive Geoff Babidge warns the COVID-19 lockdown in Victoria has hit some of its sales to China.

WARNING: A2 Milk chief executive Geoff Babidge warns the COVID-19 lockdown in Victoria has hit some of its sales to China.

Aa

a2 Milk has warned its revenue this year is likely to be hit by disruption caused by the Victorian coronovirus lockdown.

Aa

a2 Milk has warned its revenue this year is likely to be hit by disruption caused by the Victorian coronovirus lockdown.

The lockdown has disrupted the company's corporate daigou/reseller sales channel - organised personal shoppers who buy products in Australian retailers to sell in China.

The company released an update last week, saying it expected revenue of $NZ725-$NZ775 million in the first half of the financial year, down from $NZ806.7 million last financial year.

But full year revenue is expected to recover with the company forecasting $NZ1.8-$NZ1.9 billion, up from $NZ1.73 billion last year.

Chief executive officer Geoffrey Babidge said sales to retail daigous in Australia were down due to reduced tourism from China and reduced international student numbers.

The Victorian lockdown had caused additional disruption to the channel - with the contraction beyond the previous expectations.

The company expects this to continue until the end of the year.

Mr Babidge said sales in the daigou channel represented a significant proportion of infant formula sales in its Australia and New Zealand business.

But he said the company was continuing to see strong underlying consumer demand for a2 in China.

"We are of the view this short-term impact to the daigou channel will prove to be temporary, assuming stabilisation of COVID-19 related issues in Australia," he said.

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