Key Highlights

  • The a2 Milk Company (ASX:A2M) increased FY2026 Revenue by 12.4% to NZ$1.975 billion, with growth recorded across its major markets and categories.
  • Infant Milk Formula revenue increased 5% despite a flat China IMF market, while Other Nutritionals rose 42% and Liquid Milk increased 22%.
  • EBITDA reached NZ$284.4 million, with underlying EBITDA increasing 5.4%, while underlying NPAT rose 7.0%.
  • The company declared a NZ$300 million Special Dividend and increased full-year Ordinary Dividends from 20.0 to 21.0 cents per share.

The a2 Milk Company (ASX:A2M) reported FY2026 revenue of NZ$1,974.9 million, representing an increase of 12.4% from FY2025. The company recorded growth across China & Other Asia, Australia and New Zealand, and the United States, with revenue increasing 11.2%, 10.2% and 28.6% respectively.

Infant Milk Formula remained a central component of the group's performance, growing 5% in a broadly flat China IMF market. The company also reported continued expansion in English-label IMF, led by a2 Platinum™, while a2 Genesis™ contributed to growth following its launch and expansion into Vietnam.

The company's performance was affected by Supply chain disruption during the fourth quarter, particularly affecting China-label IMF product availability. Freight constraints, production backlogs, extended product-release procedures and additional customs requirements contributed to the disruption and affected second-half sales and earnings.

Other Nutritionals and Liquid Milk

Other Nutritionals emerged as a significant contributor to group growth, with revenue increasing 42%, excluding external ingredient sales associated with a2 Pōkeno. The category has expanded through products targeting children and seniors, alongside UHT products and supplements.

Liquid Milk revenue increased 22%, supported by market-share gains in Australia and New Zealand and the United States. The performance indicates broader use of the a2 Brand beyond infant nutrition, with the company continuing to develop its product range across different consumer segments.

Innovation was also a major contributor to the year's growth. Products launched in recent years accounted for more than half of the group's sales growth during FY2026. Further launches across Infant Milk Formula, Other Nutritionals and Liquid Milk are planned for the first half of FY2027.

Earnings and Cash Generation

Group EBITDA was NZ$284.4 million for FY2026, while underlying EBITDA increased 5.4%. Reported NPAT was NZ$207.5 million, with underlying NPAT increasing 7.0%. Basic Earnings per share were 28.6 cents, while underlying EPS increased 6.8% to 32.5 cents.

The reported results include losses associated with the recently acquired a2 Pōkeno operation, which recorded an EBITDA loss of NZ$23.2 million and an NPAT loss of NZ$28.3 million. The company said the losses reflected temporarily low production volumes ahead of the planned a2 Platinum™ transition and one-off transformation costs.

Closing cash stood at NZ$784.5 million, with operating cash conversion reported at 68%.

Supply Chain Transformation

The Acquisition and transformation of a2 Pōkeno represents an important development in the company's supply chain strategy. During FY2026, capital investment, capability development, product development and transition initiatives progressed according to plan or ahead of schedule.

The company plans to launch two new China-label infant milk formula products in the first half of FY2027. Meanwhile, recovery measures are underway following the fourth-quarter supply constraints, with the company stating that the main contributing factors have been addressed.

Dividends and FY2027 Outlook

The a2 Milk Company declared a NZ$300 million special dividend while retaining cash to support future Business requirements. Full-year ordinary dividends increased from 20.0 cents to 21.0 cents per share, representing an approximately 74% payout ratio.

For FY2027, the company expects revenue growth in the mid-single-digit percentage range and an EBITDA Margin of approximately 15%. The outlook incorporates expectations for continued growth while recognising the gradual recovery of China-label IMF availability and broader market conditions.

Conclusion

The a2 Milk Company's FY2026 results demonstrate continued revenue expansion across its geographic markets and product categories, despite a late-year supply chain disruption affecting China-label infant formula. Growth in Other Nutritionals and Liquid Milk provided additional sources of revenue, while innovation remained an important contributor to sales expansion. The acquisition and transformation of a2 Pōkeno is progressing alongside new product development, while the increased ordinary dividend and special distribution reflect the company's capital position at the end of FY2026.