The A2 Milk Company Ltd (ASX: A2M) share price will be on watch today after the company announced a suite of executive leadership changes.
Recently, it’s been a volatile ride for A2 Milk shareholders. Since hitting a share price low of $5.12 in May, shares have rebounded strongly by 27%.
A2M share price
Reshuffling the magnets
Following the resignation of long-time A2 Milk executive and Asia Pacific Head Peter Nathan, the region will be divested into three new business units:
- China domestic business
- International export business
- Australia & New Zealand (ANZ) domestic business
Both the International export and ANZ domestic business will be new roles within A2 Milk.
Conversely, the China domestic role previously exists within the A2 Milk organisational structure. However, it remained under the umbrella of the Asia Pacific Head.
All roles will report directly to Managing Director and CEO David Bortolussi
China domestic remains unchanged
Current Chief Executive – Greater China, Xiao Li will retain his role as head of the region.
He will continue to be responsible for A2 Milk’s China label infant milk formula (IMF) and other Chinese domestic businesses.
External scalp for International
Yohan Senaratne will join the company in the role of Executive General Manager – International.
He will be responsible for the cross-border export business including the daigou and cross-border e-commerce channels.
It will be an uphill battle turning around the international export business, which has been effectively shut down due to the closure of international borders.
Specific focus will be on the English label IMF products manufactured in New Zealand and sold into China in addition to other liquid milk and nutritional products.
Senaratne joins A2 Milk from competitor Bellamy’s, where he was the Sales and Marketing Director. He is credited for leading the relaunch of Bellamy’s IMF and baby food brand across China, South-east Asia and Australia.
Both Senaratne and Li will work closely regarding ongoing market development in China and realising the potential of the A2 brand.
Internal promotion for ANZ
Current Sales Director for ANZ Kevin Bush will be promoted to the new role of Executive General Manager – ANZ.
In the new role, Bush will be responsible for growing the liquid milk business and leading the ANZ strategy.
Prior to joining A2 Milk, he held senior sales and marketing positions with Mars, Nestle and McCain Foods
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Final thoughts
The company noted the new operating structure will not have a material impact on employee costs. Furthermore, management will review its external reporting to potentially align with the new segments.
From an outsiders perspective, all three segment heads have impressive CVs with the experience to turn around the A2 Milk share price.
However, I remain cautious as A2 Milk is facing structural changes, specifically the resurgence of domestic IMF producers in China and falling birth rates.
The company remains on my watchlist. I’ll need to see a recovery in the China business before revaluating the investment case.
