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The a2 Milk Company Limited (NZX: ATM) Updated 1H21 and FY21 Guidance

Friday 18th December 2020

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Recent sales performance

The effect of the disruption in the daigou channel, which represents a significant proportion of our infant nutrition sales in our ANZ business, has proved to be more significant and protracted than was previously anticipated. While this has predominantly affected infant nutrition sales, sales in our other nutritionals segment have now also been impacted. We had expected a moderation of the disruption to this important channel during the second quarter. While there has been some improvement, with infant nutrition sales through this channel expected to be higher in the second quarter than the first quarter, the acceleration of the recovery in recent weeks has been slower than we had previously expected.

Notwithstanding our recent focus on activating the CBEC channel in a manner which complements our daigou business, the disruption we are experiencing in the daigou channel is now having a more significant impact in CBEC. As previously noted, the daigou channel plays an important role in stimulating demand across multiple sales channels, including CBEC. While our performance in CBEC in the competitive 11/11online sales event showed year on year growth, sales in the CBEC channel in the period following that event have been below expectation.

Updated 1H21 and FY21 guidance

We now expect:

• Group revenue for 1H21 in the order of $670 million, noting that 2Q21 will be higher than 1Q21

• Group EBITDA margin for 1H21 in the order of 27 per cent

Notwithstanding the unprecedented level of uncertainty and volatility in market conditions as a result of COVID-19 and foreign exchange headwinds, we now provide an update to our FY21 guidance as follows:

• Group revenue for FY21 of $1.40 billion to $1.55 billion

• Group EBITDA margin for FY21 of between 26 per cent and 29 per cent

These numbers exclude any costs relating to the potential acquisition of an interest in Mataura Valley Milk Limited.

See the link below for more details:

Updated 1H21 and FY21 guidance

Source: The a2 Milk Company Limited

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