Net profit increased by 34.1 per cent and total revenue now sits at $1.73 billion, a figure that is expected to increase again in 2020-21 to between $1.8 billion and $1.9 billion.
“In September, we have started to observe emerging additional disruption to the corporate daigou/reseller channel, particularly due to the stage four lockdown in Victoria,” a company statement said.
(A daigou is someone who buys goods in a country like Australia and sends them to Chinese customers.)
“As a result of all these issues, we are now witnessing a contraction in the daigou channel beyond our previous expectations and without the replenishment orders that would typically be anticipated at this point,” the statement said.
“This disruption in the daigou channel is impacting our September sales and it is currently anticipated that this will continue for the remainder of the first half of the 2020-21 financial year.
“Sales in the daigou channel represent a significant proportion of infant formula sales in our Australia and New Zealand business and, assuch, we now expect the Australia and New Zealand business revenue to be materially below plan for the first half.
“However, based on the continuing strong growth in our underlying China infant milk formula brand health metrics and the performance of the rest of our business, we believe this to be a single channel logistics issue, as we are continuing to see strong underlying consumer demand for our brand in China.
“We are of the view that this short-term impact to the daigou channel will prove to be temporary, assuming stabilisation of COVID-19 related issues in Australia.”
Despite the impacts to the daigou channel, The A2 Milk Company reported performance in all other areas of the business was strong, including the liquid milk businesses in Australia and the United States.
“Importantly, our local China business is performing strongly, notably in mother and baby stores, which we anticipate will continue,” the statement said.
Despite COVID-19 resulting in disruptions and changing consumer behaviour, the company estimates it had a modest positive impact on the revenue and earnings before interest, taxes, depreciation and amortisation results for 2019-20.
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