Australian milk powders business Jatcorp has issued a profit warning for the 2025 fiscal year due to revenue declines and impairments.

Sydney-headquartered Jatcorp said in a stock exchange filing today (11 July) it expects to book a net loss of A$7.6m to A$8m ($5m to $5.2m) for the 12 months to the end of June.

That is based on an anticipated second-half loss of A$1.5m to A$1.9m, on top of the A$6.1m loss registered in the first six months of the fiscal year.

Jatcorp, which sells the immunity-focused dairy powder brands Neurio, Moroka and Jinvigorate, said the projected loss is due to “revenue contraction”, an impairment at its subsidiary Sunnya Goodwill, and inventory write-downs.

It also cited legal expenses related to a dispute in China over the Neurio brand.

Revenue for the year is expected to decline by around A$39m, largely due to the suspension of Neurio-branded product sales in China.

However, Moroka-branded products showed stronger-than-expected sales in Q3 and Q4, partially offsetting the revenue decline, the group said.

In fiscal 2024, revenue from continuing operations stood at A$52.4m, while profit after income tax expense was A$1.6m.

Jatcorp said it is facing legal proceedings in China, which have led to the suspension of all Neurio product sales.

Consequently, Sunnya's goodwill and trade names have been impaired to the tune of A$2,347,482 and A$225,633, respectively.

A non-cash inventory impairment of approximately A$1.4m was also recognised, reflecting excess stock from the suspended Neurio operations, Jatcorp added.

Jatcorp's legal and professional fees decreased by approximately A$1m compared to the previous year but remained high at A$4.1m.

The company said in April that Sunnya had secured a win in the New South Wales Court of Appeal against former directors Yinghan He, Yanxia Lu, and associated entities, including Guangzhou Niurui Trading Co., Guangzhou Aotea Biological Technology, and supplier Easter Wu’s Supermega Group.

The court confirmed the defendants’ breach of duties by attempting to misappropriate Sunnya’s Neurio trademarks and undermining its China market through rival brands.

Despite the challenges, Jatcorp said today it “remains focused on the execution of its strategic growth agenda” and is “cautiously optimistic” about the outlook for FY2026.

Due to the operational restructuring efforts undertaken in FY2025, management expects “improved performance” in the year ahead, supported by a "sharpened focus on brand development, distribution expansion, and margin recovery".

In February, Jatcorp signed a sales incentive agreement with retailer H&S International to boost Moroka brand sales in Mainland China.

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Jatcorp said H&S has “reaffirmed its commitment” to achieving the contracted sales target of A$11m for FY2026.

"Jatcorp issues profit warning on revenue declines, impairments " was originally created and published by Just Food, a GlobalData owned brand.

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