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Saturday 21 May 2022

A2 Milk to “vigorously defend” class action

6th October 2021 By Staff Reporter | news@foodticker.co.nz | @foodtickernz

The A2 Milk Company said it will “vigorously defend” class action legal proceedings which have been filed against the dual-listed business in Australia’s Supreme Court of Victoria.

Unhappy shareholders are behind a class action lawsuit in Australia.

Law firm Slater and Gordon is bringing the case on behalf of shareholders who bought into the $4.7bn speciality dairy company between August 2020 and May 2021, but suffered when its share price dropped around 70%.

The class action alleges that the company engaged in misleading or deceptive conduct in breach of Australia’s Corporations Act, and breached continuous disclosure rules in posting four earnings downgrades during this period.

A2 Milk responded this morning with a statement to the NZX that said it had been notified that group proceedings had been filed, in which it was named as the defendant.

“The company considers that it has at all times complied with its disclosure obligations, denies any liability and will vigorously defend the proceedings,” the statement said.

It added that A2 remained “confident in the underlying fundamentals of the business and growth potential.”

The company’s share price dropped more than 3% in early trading today to $6.60.

During the period covered by the lawsuit, A2 downgraded its earnings guidance four times as Covid-19 saw closed borders disrupt sales of its infant formula in its daigou channel, coupled with falling birth rates in its biggest export market of China, leaving it with excess inventory.

According to RNZ, Kaitlin Ferris, class actions practice group leader at Slater and Gordon, said A2 was or ought to have been aware that its FY21 guidance did not adequately consider factors likely to affect the company’s financial performance.

This included attempts to boost sales of its English label infant formula through e-commerce sales channels into China at the expense of sales through the unofficial daigou channel, Ferris said.

She also alleged the company should have known that disruptions to the daigou channel would have affected the associated marketing activity, thus impeding sales through e-commerce channels.

 

 


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