a2 Milk company raises FY26 revenue guidance on strong trading

The a2 Milk Company has upgraded its FY26 revenue guidance, now expecting low double-digit percent growth over FY25 continuing operations. This improved outlook is attributed to stronger-than-expected trading in infant milk formula (IMF), other nutritionals, and liquid milk, alongside NZD depreciation impacting sales and expenses. The company anticipates an EBITDA margin of approximately 15% to 16% and NPAT to be slightly up on FY25 reported. Cash conversion is projected at 80% to 90%, with capital expenditure between $60 million and $80 million.

For FY25, the company reported record sales of $1.9 billion, a 13.5% increase from FY24, with EBITDA up 17.1% to $274.3 million. Key achievements included reaching a top-4 brand position in the China IMF market and initiating shareholder returns with dividends totalling 20.0 cents per share.

Strategic initiatives include the acquisition of a China IMF registered manufacturing facility in Pokeno, New Zealand for ~$275 million, and divestment of its stake in Mataura Valley Milk (MVM) for ~$100 million. These transactions aim to enhance market control, support growth in core IMF business, and accelerate manufacturing capability. MVM will be treated as discontinued operations, with total losses from these operations expected to be approximately $110 million.