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A2, Synlait shares fall after demand drops

Steven Deare
·1-min read

Shares in ASX-listed milk producers A2 and Synlait have taken a fall as the pandemic continues to challenge supply and demand.

A2 Milk on Monday warned it was fielding fewer orders from its corporate Chinese reseller channel due to the coronavirus restrictions in Melbourne.

These resellers, based in Melbourne, are unable to access their warehouses due to travel restrictions imposed by the Victorian government.

These customers represent a large chunk of infant formula sales.

A2 management said it expected sales for Australia and New Zealand to fall below expectation for the first half as a result.

However, the company said selling formula through the reseller channel was only part of its China strategy, which uses multiple channels and products.

Group revenue for the first half is forecast to be between $NZ725 million and $NZ775 million.

Shares finished the session down 10.78 per cent to $15.31.

Meanwhile Synlait Milk reported full-year net profit after tax fell nine per cent to $NZ75.2 million for the 12 months to July 31.

Chair Graeme Milne said this was due to investments in new facilities and acquisitions from the last two years which would help growth.

Demand for infant formula was expected to be lower during the first half of the financial year. This was due to higher than usual stock levels in the supply chain.

Greater demand should return in the second half.

No dividend was declared.

Shares finished the session down 7.61 per cent to $5.22.