New Zealand’s a2 Milk expects to incur higher costs in FY23

NEW Zealand’s a2 Milk on Monday said it anticipates increased distribution costs in fiscal 2023 owing to expenses related with a China label transition.

The dairy firm, which counts China as its key market, has seen sales drop in its corporate “daigou” channel, a reseller network where people outside China buy a2’s products and ship them to Chinese consumers informally.

The company said it expects the “increasingly challenging” headwinds in the China infant milk formula (IMF) market to continue due to declining birth rates in Asia’s largest economy.

The company said it expects revenue growth in the low double-digits in fiscal 2023, compared to its previous forecast of high single-digit revenue growth.

The dairy producer reported a net profit after tax of NZ$68.5 million (S$57 million) for the half-year ended Dec 31, compared with a profit of NZ$56.1 million reported a year ago.

The company posted a revenue of NZ$783.3 million compared with NZ$660.5 million in the previous corresponding period. REUTERS