CEO David Bortolussi said that the impact of currency on the cost of sales and the cost of doing business could mean that the baby formula and fresh milk group will not make as much money as planned in the September quarter.
“In line with the company’s outlook statement from August 29, 2022, other business and industry risks include, but are not limited to, the impact of COVID-19 on the supply chain, the timing of the SAMR registration process, and the impact of price increases on volume,” Mr. Bortolussi said.
Early in September, the State Administration for Market Regulation (SAMR) gave a2 Milk’s manufacturing partner, Synlait Milk, a renewal of its GB registration for its China label infant milk formula.
This lets Synlait make the registered China label product from a2 Milk until February 21, when they have to switch to the new GB standard. The two are working on a new complex registration, but it’s not clear when this will happen.
The most important strategic goal for Mr. Bortolussi is to come up with new ideas more quickly in the China label business, which is limited because it only has one registration with Chinese authorities.
The CEO said on Friday that cross-border trade, changes in the regulatory environment, and commodity prices are also factors in this year’s performance.
In an ASX statement, he said, “These risks could have a big effect on expected revenue and earnings.”
A2 Milk also said on Friday that its $NZ150 million ($133.6 million) on-market buyback will begin on October 5. This buyback could last for up to a year.
During that time, the company can buy up to 37,180,621 ordinary shares through the NZX and ASX at the market price at the time.
During the buyback period, a2 Milk will continue to look at the market, its current share price, and investment opportunities. This will help them decide when, how many, and how much shares to buy back.
In a statement, Mr. Bortolussi said, “The company reserves the right to suspend without notice, change, or end the buyback program at any time.”