Login
Another class action launched against a2 Milk
A2 Milk has been hit with another class action this year and has been accused of deceiving shareholders after failing to accurately predict its sales performance.
Lauren Croft
Investors and shareholders are alleging that they were misled by a2 Milk and have hit the milk company with a class action to “recover their losses”.
After investigating a possible class action in October, Shine Lawyers are officially following suit and have launched their own class action in the Victorian Supreme Court today.
Shine Lawyers class actions practice leader Craig Allsopp said that investors were misled by the milk company’s inflated forecast of baby formula sales – and that “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 explained.
At the end of the 2021 financial year, a2 Milk reported earnings 20 per cent lower than predicted, resulting in a 62 per cent drop in the share price.
Mr Allsopp added 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. 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,” he said.
“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.”
Lauren Croft
Lauren is a journalist at Lawyers Weekly and graduated with a Bachelor of Journalism from Macleay College. Prior to joining Lawyers Weekly, she worked as a trade journalist for media and travel industry publications and Travel Weekly. Originally born in England, Lauren enjoys trying new bars and restaurants, attending music festivals and travelling. She is also a keen snowboarder and pre-pandemic, spent a season living in a French ski resort.
