A2 Milk lifts 2026 revenue forecast on stronger infant formula sales

A2 Milk expects a slight increase in net profit this year. Photo / Thinkstock

A2 Milk has upgraded its 2026 revenue guidance because of stronger-than-expected trading in infant formula, other nutritionals, milk and a weaker New Zealand dollar.

The company said it now expects revenue growth in the low double-digit percentages, compared with 2025, from continuing operations.

A2 said in materials accompanying speech notes at today’s annual meeting that its profit is expected to be slightly up on 2025’s reported profit of $209.9 million.

The first half of 2026’s revenue growth was expected to be higher than the second half.

“I’m pleased to say that we’ve started the financial year strongly with infant formula, other nutritionals and liquid milk product categories all trading ahead of expectations,” chief executive and managing director David Bortolussi said.

In addition, Bortolussi said changes to actual and forecast currency rates reflecting New Zealand dollar depreciation are expected to inflate sales and expenses, with the impact to ebitda (earnings before interest, tax, depreciation and amortisation) “not expected to be material”.

English-label infant formula revenue growth was expected to be significantly higher than China-label infant formula revenue growth.

Ebitda percentage margin was expected to be about 15% to 16%.

In August, a2 announced its result and a major change in direction, which involved selling its interest in Mataura Valley Milk and buying Yashili New Zealand’s plant at Pōkeno.

For the 2025 year, a2 Milk’s ebitda came to $274.3m, up 17.1%, on an ebitda margin of 14.4%, up 0.4 percentage points (market expectations were for $271m).

Chair Pip Greenwood said that since the balance date, a2 Milk had made significant progress in its supply chain transformation strategy, with the acquisition of the facility at Pōkeno and the sale of its interest in Mataura Valley Milk.

“These transactions strengthen our strategic position and provide greater certainty over future capital needs,” she said.

A2 has already announced a $300m special dividend, subject to regulatory approval in connection with Pōkeno’s two existing China infant formula products.

The company expects to provide further details on the dividend within the next 12 months.

Bortolussi said market share in the all-important China market continued to improve, resulting in a2 rising to the number four brand position in the world’s largest formula market, with 8% overall market share.

“This is a major milestone for our company, which launched its first IMF [infant milk formula] product only 12 years ago, competing against the global leaders in the category and strong domestic players,” he said.

“We continued to ramp up our innovation, with key new product launches during the year, in the infant, kids and seniors nutrition segments.

“Early results are encouraging and we are hopeful that a2 Genesis, Kids Advance and our Seniors range will be key growth drivers in 2026 and beyond.”

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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