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GLASS HALF EMPTY FOR INVESTORS SUING A2 MILK IN CLASS ACTION

Bitter A2 Milk shareholders have brought a class action against the company in the Victorian Supreme Court with Shine Lawyers. Investors allege they were misled by the company’s inflated forecast of baby formula sales.

Craig Allsopp, the class actions Practice Leader leading the claim said, “investors who purchased shares between 19 August 2020 and 7 May 2021 have a right to recover their losses.”

“Our claim alleges that A2 Milk had predicted its baby formula would have a high sales performance in FY21, contributing to a 30 per cent boost to its earnings before interest, taxes, depreciation, and amortisation, but the forecast was misleading and caused our clients significant financial loss,” he said.

At the end of FY21, the company reported earnings 20 per cent lower than predicted, resulting in a 62 per cent drop in the share price.

Mr Allsopp, said that A2 Milk may have breached the Corporations Act by engaging in misleading and deceptive conduct.

“We believe A2 Milk did not reasonably predict its profit margin, and should have known that its expected earnings were not going to be achieved in that fiscal year,” he said.

“In our view, this may have constituted a breach, by A2 Milk of its continuous disclosure obligations for failing to inform shareholders of its future trade plans.”

“A2 Milk tried to increase sales performance by advertising its English label baby formula online but this plan failed, instead causing a decline in sales among Daigou or Chinese consumers in Australia who purchase baby formula in Australian stores and post it to family overseas,” he said.

Shareholders are encouraged to register their interest in the A2 Milk Class Action here.


MEDIA ENQUIRIES

Miriam Sawan
Media & Communications Team Leader
0436 666 575
[email protected]