The a2 Milk Company Limited

Net sales revenue increased 12.4% to $1.972 billion. Gross margin was 47.7%, down 3.4 percentage points, with reported EBITDA of $284.4 million and underlying EBITDA of $307.6 million; underlying EBITDA margin was 15.6%. Underlying net profit after tax was $235.8 million and underlying EPS was up approximately 7%. Final dividend was $0.095 per share with a payout ratio of around 74%, and the company said total ordinary and special dividends in FY26 were $453 million. For FY27, management expects revenue and EBITDA to grow, mid-single-digit revenue growth overall, EBITDA margin of approximately 15%, first-half revenue broadly in line with last year, and materially second-half-weighted results.

David Bortolussi framed FY26 as a year of broad-based growth, innovation, and supply chain transformation, but said the fourth-quarter disruption materially hurt China IMF availability, share, and second-half earnings. He emphasized early recovery signs, including improved brand sentiment, stronger new-user conversion, and a measured plan to rebuild trust rather than chase volume quickly. He also highlighted that the company’s product portfolio has expanded from 8 in FY21 to a planned 36 by FY27, reinforcing a long-term growth opportunity despite the temporary setback.

Dave Muscat said gross margin pressure was driven by a2 Pokeno losses, lower China label mix, one-time supply chain costs, and higher milk and ingredient costs, especially in the second half. He quantified operating cash flow at $133.1 million with cash conversion of 68%, closing cash and term deposits at $784.5 million, and no external debt. He also noted $325 million of marketing investment, SG&A higher due to China capability and transformation spend, and that FY27 EBITDA margin should be around 15%, with most of the decline from FY25’s 16.6% margin coming from gross margin rather than SG&A.

Analysts focused on the FY27 margin bridge, pricing power, China label share recovery, the pace of regain after the supply disruption, and whether the new China label products can contribute meaningfully. Management said the vast majority of the expected margin decline versus FY25 comes from gross margin mix dilution and cost pressures, while marketing will be higher mainly in the first half and should normalize over the year. On China share, management would not give July data but said offtake is around 40% of prior run-rate now, should recover gradually through the year, and could return to roughly pre-disruption run-rate by year-end, though reported sales would not fully recover until 1H FY28. They also said they are constraining distribution intentionally to protect brand health and avoid inventory problems.