New Zealand's a2 Milk on Friday slashed its first-half revenue forecast on a steeper-than-expected decline in informal Chinese demand due to disruption caused by the COVID-19 pandemic, sending its shares down 25%.
The Auckland-based company now expects revenue for the six-months through December to be NZ$670 million ($478.98 million), significantly below its previous forecast range of NZ$725 million and NZ$775 million, and last year's NZ$806.7 million.
The cut sent shares of the dairy producer to NZ$10.49, their lowest since January last year, marking their worst day since November 2008.
Sales through the so-called daigou channel, where shoppers in China buy products in bulk from stores outside the country and import them informally, account for a significant portion of the dairy firm's revenue.
However, virus restrictions in Australia's Victoria state in the second quarter pressured retail sales and dented its daigou network more than previously thought, a2 Milk said. Lower Chinese tourist and student arrivals is also likely to continue impacting recovery, it said.
The firm also cut its full-year revenue guidance range to NZ$1.40 billion to NZ$1.55 billion from its previous estimate of NZ$1.80 billion to NZ$1.90 billion.
($1 = 1.3988 New Zealand dollars)
(Reporting by Sameer Manekar and Nikhil Kurian Nainan in Bengaluru; Editing by Himani Sarkar)
