Market News 13 July 2026

David Colman writes:

Last week, the a2 Milk Company provided a supply chain update in relation to its China infant milk formula (IMF) business and an update on its preliminary unaudited full-year 2026 results.

The supply chain update elaborated on the update from 13 April, which noted that shortfalls of China label IMF product at distributors and retailers were expected to materially affect in-market product availability during the fourth quarter of 2026.

The shortfalls were due to strong demand in the preceding quarter, freight challenges, Synlait Milk’s production backlog, extended product release times and additional customs requirements.

Basically, a2 Milk lacked the inventory needed to supply the market and keep shelves stocked.

China label IMF product availability was confirmed to have been materially affected by these factors, with a large proportion of existing users having to switch to alternative brands during the quarter.

Some users switched to a2 Milk’s English label products, which were not affected to the same degree, although a2 Genesis was affected by planned production downtime at the Pokeno plant and changes to Chinese importation requirements.

A2 product availability issues have now been substantially resolved, and product flows of China label and English label products have resumed, with stock levels returning to target levels.

The company must now focus on marketing, likely involving promotions and sales initiatives, to win back previous China label IMF users and gain new customers through its retail and distribution partners.

Full-year 2026 results will reflect the fourth-quarter supply chain issues affecting China label IMF sales, with full-year sales down approximately 14% on full-year 2025.

All other product categories, including English label IMF, Other Nutritionals and Liquid Milk, are significantly up for the full year.

The well-performing categories should help ATM deliver full-year results in line with, or slightly ahead of, the guidance range previously announced on 13 April 2026, which included:

- Revenue of approximately $1.97 billion, up more than 12% on FY25. April guidance was low to mid double-digit growth.

- EBITDA margin to be at the high end of the April guidance range of 14.0% to 14.5%.

- NPAT to be slightly up on reported FY25. April guidance was for a similar or lower result, with underlying NPAT expected to be up.

- Cash conversion of approximately 70%. April guidance was 50%.

ATM will release its audited FY26 results and FY27 outlook commentary on 17 August 2026.

Tāiko Critical Minerals

One of New Zealand’s newest listings, Tāiko Critical Minerals (TCM), which listed in March this year, announced last week a significant boost to its project with the receipt of a Government funding offer.

Hon Shane Jones, Minister for Resources and Regional Development, announced on behalf of the New Zealand Government that it has offered to provide financial assistance of up to NZ$20 million towards funding a $40 million wet separation plant planned as part of TCM’s Barrytown Critical Minerals Project on the West Coast.

Westland Mineral Sands, which is not listed, will receive $30 million towards progressing a proposed $70 million wet separation plant, also contributing to the development of the fledgling domestic critical minerals industry.

The minister, a flag-bearer for the New Zealand mining sector, has made it clear that if the world is looking to secure critical minerals for manufacturing and scientific development, the Government will support the industry in New Zealand.

TCM has since completed the first part of a capital raising with an oversubscribed placement of shares. The placement comfortably raised $7 million, including $2 million of oversubscriptions above the $5 million sought.

A total of 28 million shares were issued through the placement at $0.25 per share.

The second part of the capital raise involves a share purchase plan (SPP) for New Zealand-resident TCM shareholders, capped at $3 million. The SPP offers new shares at the same price as the placement of $0.25.

Based on the demand for the placement, and with the on-market share price closing at $0.30 on Friday, TCM appears likely to successfully raise the targeted funds.

The money raised will be used to fund working capital, including completion of the Fast-track resource consent process, the Definitive Feasibility Study and OIA approval for the Barrytown Critical Minerals Project.

Infratil

Infratil’s investment in the rapidly growing data centre sector has been a major success.

The company updated the valuation of its investment in CDC, which owns and operates large-scale data centres across Australasia.

CDC’s independent valuation increased by 23.6% during the April to June quarter to a midpoint of A$18.5 billion, up A$3.5 billion.

The increase was driven by:

- Strong growth in CDC’s contracted capacity to more than 1GW.

- The acceleration of CDC’s build programme to support this demand.

- The expansion of CDC’s total pipeline through to 2040 from 2.6GW to 3.9GW of leasable capacity to support future growth.

The numbers are impressive. One gigawatt is equivalent to the electricity used by many hundreds of thousands of homes.

Infratil’s 49.72% interest in CDC is now independently valued at A$9,213 million, up A$1,759 million from A$7,454 million.

A$9.2 billion is more than NZ$11 billion, which indicates that CDC represents more than half of Infratil’s business, noting that its total asset value was NZ$20.6 billion for the year ended 31 March 2026.

Bremworth

Minority shareholders of Bremworth (BRW) have no choice but to accept that the scheme of arrangement initially announced in October last year will not go ahead.

The board of Bremworth was forced to abandon discussions regarding a scheme that would have seen Floorscape acquire 100% of BRW for effectively $1.05 to $1.15 per share, comprising a cash payment of $0.75 per share and a capital distribution of between $0.30 and $0.40.

A group of shareholders, representing in aggregate approximately 38% of shares and led by David Ferrier, were committed to voting against the scheme.

The board was clearly frustrated with the opposing group, which decided to vote against the scheme after the final regulatory hurdle had been achieved but before an Independent Adviser’s Report was produced.

The report would have given shareholders the ability to assess the scheme and would have included an independent valuation, including an indicative value of the company compared with the offer price.

Bremworth’s remaining 2,300-plus shareholders might have welcomed the scheme, considering the on-market share price has ranged between $0.30 and $0.90, with no dividends paid, over the past five years.

The opposing shareholders have not offered an alternative plan for BRW or provided details of any other bidder with an offer at or near the level of the Floorscape scheme.

The board engaged with Floorscape in good faith and continues to believe that the scheme was in the best interests of Bremworth shareholders. It remarked that it was disappointed shareholders were not given the opportunity to vote on the scheme with the benefit of all relevant information.

The board will now focus on improving performance, with priorities including a cost reset, revenue recovery and capital discipline.

Wool carpet sales in New Zealand and Australia are ahead of last year, but trading in both markets is challenging, and the company was neither cash flow positive nor profitable in the second half of full-year 2026.

BRW will announce its preliminary full-year 2026 financial results in late August.

Fletcher Building

Fletcher Building’s increase in guidance for full-year 2026 was welcomed by long-suffering shareholders.

The company indicated there would be a 6.4% increase in full-year 2026 EBIT guidance to between $400 million and $403 million, including approximately $52 million of earnings from surplus property sales.

An update on volumes showed improvement across the company’s core manufacturing and distribution divisions.

Light Building Materials benefited from favourable raw material procurement, manufacturing productivity improvements and greater use of low-cost scrap.

Iplex in New Zealand and Australia saw increases in demand as customers accelerated purchases ahead of progressive price increases.

Heavy Building Materials delivered a mixed performance, reflecting an ongoing recovery from weaker roading and project activity in the first half of 2026, alongside stable performances from Golden Bay, Firth and Humes. Demand in the civil and infrastructure sector was elevated due to unseasonably settled weather through June.

Within Distribution, PlaceMakers Frame & Truss volumes were higher. A new Cavendish Drive site is now operational and supporting the Auckland market.

Residential took 220 residential and apartment units to profit in the fourth quarter. A total of 536 units were taken to profit in full-year 2026, compared with 666 in 2025.

FBU expects existing construction projects to progress, supporting ongoing demand for materials. However, economic and cost uncertainty were noted as causes of delays or cancellations of new projects, particularly in the commercial sector.

If sustained, this trend is likely to weigh on FBU’s performance in the first half of full-year 2027.

FBU’s full-year results will be released on 19 August.

Travel

David Colman – Lower Hutt – 21 JulyDavid Colman – Palmerston North – 24 JulyDavid Colman – Whanganui – 6 AugustDavid Colman – New Plymouth – 7 August

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