A2 Milk Co.'s stock plummeted 15.26% early Monday, following the company's announcement of significant setbacks in its China-label infant milk formula business and a consequent downgrade to its financial guidance.

The dairy company cited multiple challenges affecting product availability in China, including low inventory levels, higher air freight costs due to the Middle East conflict, and extended quality assurance release times from new testing requirements. These issues are expected to materially reduce China-label infant milk formula availability during the fiscal fourth quarter, primarily in April and May.

As a result, A2 Milk now expects fiscal 2026 net profit to be similar to or lower than the previous year's result on a continuing-operations basis. The company cut its EBITDA margin forecast to 14.0-14.5% from 15.5-16.0% and revised revenue growth expectations to low-to-mid double-digit percent from mid double-digit percent previously. Analyst commentary suggests these supply issues are likely temporary, with strong underlying demand for A2 Milk's products in China.