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New Zealand’s a2 Milk expects slight losses as coronavirus stockpiling ends

19 August 2020

New Zealand’s a2 Milk Co forecasts slightly lower earnings margins for fiscal year 2021 on 19 August.

Reuters reports that the report comes as the COVID-19-related stockpiling that boosted its annual profits began to fade.

The dairy producer's profit for the year jumped 34.1 percent, buoyed by stronger demand for its infant formula and other products as customers purchased essential items in bulk ahead of lockdowns.

Revenue from the infant nutrition segment, its biggest earner, rose 33.8 percent to NZ$1.42 billion, with sales from a2's China label effectively doubling to NZ$337.7 million during the year.

However, a2 Milk said it expects fiscal 2021 core earnings margin between 30 percent and 31 percent, slightly below the 31.7 percent recorded in 2020, due to higher costs and the lack of forex and COVID-19 tailwinds it experienced this year.

"In our view, a proportion of consumer pantry stocking driven by COVID-19 unwound in the fourth quarter," the company said in a statement.

"However, this will remain a dynamic situation and we will continue to monitor changes in consumer behaviour moving forward."

The dairy producer said net profit after tax was NZ$385.8 million for the year ended 30 June, compared with NZ$287.7 million a year ago.

The figure came in slightly below estimates of NZ$389.9 million, according to IBES data from Refinitiv.

($1 = 1.5152 New Zealand dollars)

Read more about this story here.

Source: Reuters


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