A2 Milk reports strong sales but softer profit in H2 2026

New Zealand-based dairy company a2 Milk reported strong sales growth in the second half of fiscal 2026 but posted softer profit margins amid rising production costs.

The company, which specializes in A2 beta-casein milk, said revenue rose 12% year-over-year to NZ$1.45 billion ($890 million) for the six months ended December 31, 2025, exceeding analyst expectations. Volume growth in key markets, including Australia and China, drove the increase, though the company noted that pricing power remained constrained by competitive pressures.

Profit before tax declined 8% to NZ$185 million, reflecting higher raw material and logistics costs, as well as investments in marketing and product innovation. Net profit after tax fell 7% to NZ$132 million, with the company citing margin compression across its core dairy operations.

Chief Executive David Bortolussi said the results demonstrated resilience in demand for a2 Milk’s products but acknowledged that cost inflation had weighed on profitability. "We continue to see strong consumer preference for our products, particularly in premium segments," he said. "However, the operating environment remains challenging, with input costs remaining elevated."

The company maintained its full-year guidance for revenue growth of 8-10%, though it trimmed its profit margin outlook slightly, citing ongoing cost pressures. Analysts at Bernstein noted that while sales momentum was encouraging, margin recovery would depend on stabilization in commodity prices and supply chain efficiencies.

Shares in a2 Milk were little changed in early trading, reflecting a mixed reaction to the results. The stock has underperformed broader dairy sector indices over the past year amid concerns over margin sustainability.

The company plans to focus on cost optimization and premium product positioning in the second half of the fiscal year to offset margin headwinds.