A2M -13.56%: FY23 results out today for the milk products business were largely as expected, however, shares struggled on weaker guidance, falling to 12-month lows. Revenue was up 10% to $1.59b and EBITDA grew 12% to $219m which were both in line with consensus numbers. Margins were slightly below expectations but this was largely offset by lower marketing spend. The China infant formula market is expected to decline in FY24, in part offset by market share gains that are expected to come through. Th company is also facing higher cost headwinds. As a result, A2 expects low single-digit revenue growth whereas consensus was looking for high single-digit growth in FY24, while EBITDA margins are expected to be flat into FY24 vs a small increase expected by the market. We suspect this leads to downgrades of ~10% to consensus EBITDA numbers.
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