A2 Milk to buy New Zealand formula plant to target China growth

[WELLINGTON] A2 Milk has agreed to buy a New Zealand infant formula plant as it targets more growth in China.

The company will purchase Yashili New Zealand Dairy’s factory at Pokeno, south of Auckland, for NZ$282 million (S$214 million), it said on Monday (Aug 18). It plans to invest about NZ$100 million to increase capacity at the plant, which already holds licenses to sell formula in China.

The transaction provides direct ownership of a plant that already makes some a2 products, and an alternative to reliance on manufacturing agreements with Synlait Milk, which will continue. A2 is separately selling its 75 per cent stake in Mataura Valley Milk for NZ$100 million and subject to completion of both deals it intends to pay a NZ$300 million special dividend.

“The transactions enable the company to build a better, higher growth, lower risk, end-to-end business and deliver substantial benefits to shareholders,” said chief executive officer David Bortolussi.

A2 today reported a 21 per cent increase in net income to NZ$202.9 million for the year ended Jun 30, slightly ahead of analysts’ average estimates. Revenue climbed 14 per cent to a record NZ$1.9 billion and the company declared a second-half dividend of 11.5 US cents a share.

The company increased its share of the Chinese infant formula market by growing sales even as the overall market reduced, and is now the second-largest seller of English-label product in that market, it said.

While the overall Chinese market shrank, the decline was a third of the pace of the previous year amid signs of increased newborns, a2 said. That puts the company on track to achieve NZ$2 billion sales of in the 2027 full year, it said.

The company forecasts high single-digit per cent increase in revenue in the 2026 full year, which will generate net income “similar” to the NZ$203 million it reported today. BLOOMBERG