Updated FY21 Outlook

NZX Code: ATM
ASX Code: A2M










28 September 2020
NZX/ASX Market Release
Updated FY21 Outlook
The a2 Milk Company today provides an update to its FY21 outlook statement which accompanied its
FY20 results presentation.
In that statement, we noted that for FY21 there continues to be uncertainty resulting from COVID-19
and the potential for moderation of economic activity and that this could have various impacts,
including on participants within the supply chain.
We have also previously advised of a number of issues being experienced relating to our infant
nutrition business as a result of COVID-19. This included the flow-on effect of pantry destocking
continuing into FY21 following the strong sales uplift in 3Q20 and lower than anticipated sales to retail
daigous in Australia, due to reduced tourism from China and international student numbers.
In September we have started to observe emerging additional disruption to the corporate daigou /
reseller channel, particularly due to the Stage 4 lockdown in Victoria.
As a result of all these issues, we are now witnessing a contraction in the daigou channel beyond our
previous expectations and without the replenishment orders that would typically be anticipated at this
point.
This disruption in the daigou channel is impacting our September sales and it is currently anticipated
that this will continue for the remainder of the first half of FY21. Sales in the daigou channel represent
a significant proportion of infant formula sales in our Australia & New Zealand (ANZ) business and, as
such, we now expect ANZ revenue to be materially below plan for the first half.
However, based on the continuing strong growth in our underlying China IMF brand health metrics
and the performance of the rest of our business, we believe this to be a single channel logistics issue,
as we are continuing to see strong underlying consumer demand for our brand in China. We are of the
view that this short-term impact to the daigou channel will prove to be temporary, assuming
stabilisation of COVID-19 related issues in Australia.
Performance in all other areas of our business is strong, including our liquid milk businesses in Australia
and the USA. Importantly, our local China business is performing strongly, notably in Mother & Baby
Stores (MBS), which we anticipate will continue. We also continue to see a positive impact from the
marketing investment in activation and brand building activities from 4Q20. This strong performance
continues to be well supported by the on the ground capability investments we have made over the
past 18-24 months.

The increasingly strong underlying brand health metrics we are achieving in China IMF, including
market share and brand awareness for example, confirm the effectiveness of our continued significant
investment in marketing to drive future growth.
These factors underpin our confidence of a significant improvement in overall Group performance in
the second half of the year once the disruption in the daigou channel is reduced.
Notwithstanding the significant uncertainty and volatility in market conditions as a result of COVID-19
we have determined it appropriate to provide an update to our outlook to include our view of Group
revenue as follows:
- Group revenue for 1H21 of $725 million to $775 million
- Group revenue for FY21 of $1.80 billion to $1.90 billion
- Group EBITDA margin for FY21 in the order of 31%.
It should be noted that the sale of infant formula through the daigou channel is only one component
of our multi-channel and multi-product sales strategy into China. Our growth plan assumes MBS and
CBEC sales will represent an increasing proportion of our infant nutrition business over time, driven by
the continuing growth in underlying consumer demand.
Geoffrey Babidge
Chief Executive Officer
The a2 Milk Company Limited
Authorised by the Board of Directors
For further information, please contact:

Investors / Analysts
David Akers
Head of Investor Relations
T +61 2 9697 7013 l M +61 412 944 577
david.akers@a2milk.com

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