The A2 Milk Company Ltd (ASX: A2M) share price is falling today amid comments from the company regarding implications of the New South Wales flooding.
Recovery could take months, if not years, a spokesperson for A2 Milk told The Australian today.
At the time of writing, the A2 Milk share price is down 0.91% at $5.45. To compare, the wider All Ordinaries Index (ASX: XAO) is up 0.72%.
Let’s take a look at what the company said.
A2 Milk products impacted by Queensland flooding
Chances are, you’ve already heard and seen images of the flooding in NSW — deemed the worst the state has ever seen.
And while many residents are evacuating, A2 Milk’s four farm sources in Lismore are currently all underwater. Thankfully, a spokesman for the dairy company told The Australian that all four of its suppliers “reported they are all safe and stock has been accounted for”.
However, there are serious ramifications for the sites themselves. These include “flooded paddocks, severe pasture damage, and rising floodwaters, which have cut off roads in low-lying areas, restricting access for milk tankers”, the A2 spokesman said.
A2 also warned there could be delays collecting milk from farms. Cows are milked twice a day and if milk cannot be collected or stored, it goes to waste.
It all adds up to a long recovery process, according to the spokesman:
The clean-up process on pastures can take months, sometimes years, before cropping or grazing can resume … our farmers are an important part of the A2 Milk Company, and our farm services team will continue to provide support to our farming families during these challenging times.
A2 Milk share price snapshot
The A2 Milk share price has dropped by 42% in the last 12 months. It fell from a high of $9.68 a year ago to a low of $4.97 last month.
Despite today’s news, Bell Potter still considers A2 Milk as a buy, anticipating an earnings rebound.
The company has a market capitalisation of $4.09 billion, a last reported revenue of $1.2 billion, and a price-to-earnings ratio (P/E) of 218.
The post A2 Milk (ASX:A2M) share price slips amid ‘long-term implications’ of flooding appeared first on The Motley Fool Australia.
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Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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