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A2 Milk says it can beat China sales hit

Steven Deare
·1-min read

New Zealand milk supplier A2 says sales to Chinese resellers will improve after supply difficulties from coronavirus restrictions, but investors appeared to be bracing for a revenue hit and sold shares lower.

A2 executives on Wednesday told an annual general meeting they expected only a temporary sales impact from the severe virus restrictions in Victoria, which hampered the shipping of milk to resellers in China.

Selling infant formula to the Chinese can be lucrative. The nation is responsible for almost half of A2's infant nutrition sales.

The company in September flagged a sales hit from the virus, and chair David Hearn on Wednesday said it will have an impact on performance this year.

Chief executive Geoffrey Babidge said management expected the impact will moderate over the course of the year.

Resellers are an important channel to China but not the only one for the milk supplier.

A2 uses a mix of shops and online channels.

Mr Babidge said the company maintained its earlier guidance on first half revenue of between $NZ725 million and $NZ775 million.

It expects full-year revenue of between $NZ1.8 billion and $NZ1.9 billion.

The full-year figures suggest a big increase in sales in the second half.

Mr Babidge said this was dependent on China sales improving.

Investors did not appear to be as confident.

Shares had fallen 4.22 per cent to $14.07 at 1539 AEDT.