The A2 Milk Company Ltd (ASX: A2M) share price is losing ground at midday on Wednesday, down nearly 1% to $6.05.
The S&P/ASX 200 Index (ASX: XJO), meanwhile, is down 0.38%.
That's the price action for you.
Below we take a look at some key takeaways from the fresh milk and infant formula company's annual general meeting.
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What did A2 Milk's AGM reveal?
Some disappointing FY21 figures, previously released and likely already baked into the A2 Milk share price, were reviewed.
Those included a 30.3% year-on-year decrease in group revenue to $1.2 billion; a 77.6% decline in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to $123 million; and a 79.1% fall in net profit after tax (NPAT) to $80.7 million.
Addressing shareholders at the virtual AGM, A2 Milk CEO David Bortolussi said, "Clearly it was a disappointing financial result… Sales of China label IMF increased 15%, and our Australian milk business was up 11%. However, this was more than offset by the challenges experienced in English label IMF with sales down 52%."
Bortolussi highlighted some of the difficult steps A2 Milk took during the financial year to address the COVID-driven issues impacting the company's global operations.
"We took action to address excess inventory and constrain sales, to support English label IMF market pricing which is the key driver of channel economics," he said. The company also "swapped older inventory at distributors with newer inventory where possible, to improve product freshness, which is a key concern for consumers."
Ambitions for growth
"Another key action taken in the fourth quarter of FY21, was to deliberately increase brand investment to drive consumer demand," Bortolussi said. He then turned to the company's mid-term future plans:
Our medium-term ambition is to increase sales in China label by approximately $400 million, by doubling our share from around 2.5% to over 5%, and to grow English label by approximately $300 million, through channel recovery and gaining share in the reseller and CBEC channels.
In terms of financial goals, our ambition is to grow sales to over $2 billion in the next five or more years and to improve margins. Most of our sales ambition is expected to be driven by growth in our China business – through China label IMF, English label IMF, macro milk and other nutritional products.
A2 Milk chair David Hearn highlighted some of the issues the pandemic had thrown up for the company. "Due to the tenacity of the COVID-19 pandemic, we are forced to have a virtual meeting again this year," he said.
Hearn addressed the difficult steps the company made during the past financial year, including aggressive reductions in inventory. "Ultimately, we believe that these decisions were in the company's, best medium and long term interests by creating a platform for a return to growth in the future."
"While the issues that arose in FY21 were undoubtedly a challenge, the business remains at its heart a very robust, differentiated branded business with exceptionally strong financials."
A2 Milk share price snapshot
It's been a tough year for the A2 Milk share price, down 58% in 12 months. By comparison, the ASX 200 is up 14% in that same period.
Over the past month A2 Milk shares have lost around 9%.
