a2 Milk cuts profit guidance on supply chain woes
China infant formula shortages to persist through May
13 April 2026
1 minute read
By: New Zealand's a2 Milk cut its fiscal 2026 profit guidance on Monday, saying temporary supply chain disruptions will continue to affect availability of its China-label infant milk formula in the fourth quarter, mainly in April and May, reported Reuters.
Low inventory following earlier production challenges at Synlait Milk, its former exclusive New Zealand manufacturing partner, a backlog of unfilled orders with limited capacity to recover volumes, and extended customs clearance processes in China have constrained availability, the dairy producer said.
Freight disruptions, including limited air freight availability and uneven sea freight capacity amid Middle East tensions, have also weighed on product flows, a2 Milk said.
"While the supply chain impacts are primarily timing-related and one-off in nature, their cumulative effect is now expected to impact the company’s performance against FY26 guidance," the company said.
The company now expects full‑year net profit after tax to be below or broadly in line with the NZ$202.9 million ($117.52 million) reported a year earlier. It had previously forecast higher earnings.
It also cut full-year revenue growth guidance to low- to mid-double-digit percentages, from a mid-double-digit outlook, and trimmed its forecast for earnings before interest, tax, depreciation and amortization margin to about 14.0%-14.5%, from 15.5%-16.0%.
Responding to a2 Milk’s statement, Synlait said enhanced testing requirements for all infant formula products had extended release times and increased working capital needs, adding it was working through the supply‑chain impacts, rebuilding inventory and will continue to support a2 Milk.
In February, Synlait said it had fixed most production problems at its primary manufacturing plant Dunsandel facility, issues it first flagged in July 2025, but warned higher costs linked to the disruptions would continue to weigh on the business.
Synlait also reiterated it would not provide fiscal‑year 2026 guidance, having withdrawn its full‑year outlook earlier due to ongoing manufacturing challenges.
($1 = 1.7265 New Zealand dollars)
