Why have A2 Milk (A2M) shares fallen today?
A2M -13.11%: revised guidance lower again today, saying the hopefully pickup in demand hadn’t eventuated. The company now expects revenue in the range of $1.2-$1.25b, down from over $1.4b which was expected as recently as the half year in February. EBITDA margins have also been significantly impacted, now expected to come in at 1-12% which would imply $132-$150m for the full year. The company “actively reduced sales” in May and June given inventory checks indicated a backlog of stock down the supply chain. The biggest drag being the difficult trading conditions in the key Chinese infant formula market. The company also indicated that the issues were likely to impact into next financial year however they remained confident in the long term opportunity, albeit with a strategy review underway.
