The A2 Milk Company Ltd (ASX: A2M) share price is down 1% despite providing upgraded guidance for FY26 at its annual general meeting (AGM) today.
A2 Milk is a leading producer of infant formula and dairy products made with A2-type protein. It has operations in multiple countries including in Asia, New Zealand and Australia.
A2 Milk updated guidance for FY26
The company had its AGM today and updated the market on upgraded revenue guidance for FY26. This was due to stronger trading than expected in the infant milk formula (IMF), other nutritionals and liquid milk divisions.
The company also noted that it expects inflated sales and expenses due to movements in actual and forecast currency rates reflecting New Zealand dollar (NZD) depreciation. Management don’t expect this to have a material impact on profitability.
On a continuing operations basis, the company is forecasting revenue growth of a low double digit percentage when compared to FY25. A2 Milk highlighted that it expects revenue growth in the first half of FY26 to be higher than the second half.
Its English label IMF revenue growth is expected to be significantly higher than the China label IMF revenue growth.
Here is a closer look at some of A2 Milk’s expected numbers for FY26:
- EBITDA (EBITDA explained) margin to be approximately 15% to 16%
- Depreciation and amortisation expected to be around $20 million to $24 million
- Interest income to be lower due to lower market rates and net transaction cash outflows
- Net profit after tax (NPAT) to be slightly up on FY25
- Cash conversion of around 80% to 90%
- Capital expenditure of approximately $60 million to $80 million
Summary thoughts on the A2 Milk share price
Pleasingly this guidance is stronger than what the company previously expected when it released its FY25 result in August.
With the ASX 200 (ASX: XJO) up 1% today, and the A2 Milk share price down around 1%, it seems that the market isn’t impressed by the upgraded guidance.
The infant milk formula market is challenging with China’s declining birthrate. But, A2 Milk is clearly performing well to continue growing revenue under these conditions.
For existing shareholders it’s good to see that the company has positive expectations for FY26, however I wouldn’t be purchasing at this share price, I’d rather buy other ASX growth shares.
