Trading update & FY20 Outlook

NZX Code: ATM
ASX Code: A2M

The a2 Milk Company Limited
www.thea2milkcompany.com

22 April 2020
NZX/ASX Market Release


Trading update & FY20 Outlook

The a2 Milk Company provided its last update on the Group’s trading performance and its full year FY20
outlook with the release of its interim FY20 results (1H20) on 27 February 2020.
Since then, the Company has continued to experience strong revenue growth across all key regions,
particularly in respect of infant nutrition products sold in China and Australia.
We are now able to confirm that our revenue for the three months to 31 March 2020 (3Q20) was above
expectations. This primarily reflected the impact of changes in consumer purchase behaviour arising from
the COVID-19 situation and included an increase in pantry stocking of our products particularly via online
and reseller channels. We are unable to estimate the timing and extent to which pantry stocking may
unwind.
In addition, our China segment revenue, transacted in US dollars, was favourably impacted by a significant
depreciation of the New Zealand dollar to the US dollar in the quarter.
Overhead costs are now tracking lower than previously expected due to travel restrictions and some
planned recruitment, particularly in China, being temporarily delayed.
The health and wellbeing of our people and those of our partners remains our primary focus and we
continue to take measures to ensure all employees are as safe as possible.
Our business has benefited from the support of all our strategic partners who have assisted in managing
the various supply chain challenges which have arisen during recent months.
We support the actions of the various governments in the countries in which we operate in responding to
the COVID-19 pandemic. We will continue to closely monitor the situation and remain vigilant to the
ongoing advice of authorities.
FY20 Outlook
Given the COVID-19 situation, the outlook for both revenue and earnings remains uncertain. Furthermore,
significant uncertainty remains around the potential impact on supply chains and consumer demand in our
core markets and the resulting financial impact on our performance for the balance of the financial year.
Overall for FY20, we anticipate ongoing revenue growth across our key regions supported by increased
levels of marketing investment in China and the USA as well as, to the extent practicable in the current
circumstances, the ongoing development of our organisational capability to support the execution of our
strategy.

2
Notwithstanding this uncertainty, we anticipate revenue for FY20 in the range of $1,700 million to
$1,750 million.
Full year EBITDA margin is now anticipated to be above that advised in February and in the range of
31% to 32%. This assumes that planned marketing activity for FY20 of $200 million, weighted to 2H20, will
be fully expended prior to year-end.
Our 2H20 EBITDA margin is therefore expected to be higher than previously anticipated. This is primarily a
result of:
• Higher revenue, and hence gross margin, from higher margin nutritional products, in part due to
consumer pantry stocking in 3Q20 compared to expectations;
• Favourable impact arising from exchange rate movement in USD:NZD impacting on China segment
revenue and earnings; and
• Lower than expected costs for travel, and other costs as a consequence of a delay in planned
recruitment, due to COVID-19 restrictions.
It is unlikely that these factors will be sustained as these unprecedented circumstances begin to unwind.
Given the above, the Board continues to consider it appropriate that the Company target an EBITDA margin
in the order of 30% in the medium-term. This assumes the market performance and mix of our products
remains broadly consistent and the competitive environment evolves as anticipated. We will keep the
balance between growth and investment under constant review.

Geoffrey Babidge
Chief Executive Officer
The a2 Milk Company Limited

For further information, please contact:
Investors / Analysts
David Akers
Head of Investor Relations
M +61 412 944 577
david.akers@a2milk.com


Media
Rick Willis
M +61 411 839 344
rick@networkfour.com.au