The A2 Milk Company Ltd (ASX: A2M) share price was out of form again in the 2022 financial year.
During the 12 months, the struggling infant formula company's shares dropped 27%.
This meant that the A2 Milk share price had lost almost 80% of its value over the last two years.
What happened to the A2 Milk share price in FY22?
Investors were selling down the A2 Milk share price after its miserable performance continued.
The selling pressure began in August when the company released its full-year results and reported a 30% decline in revenue to NZ$1.21 billion.
Things were even worse for its earnings before interest, tax, depreciation and amortisation (EBITDA), which fell 77.6% year on year to NZ$123 million. This earnings result includes the impact of a massive NZ$109 million write-down of inventory after some very poor inventory management.
And while this very costly write-down has sorted out its inventory issues, it hasn't stopped its sales and earnings from continuing to decline during the current financial year.
In February, A2 Milk released its half-year results and revealed a 2.5% decline in revenue to NZ$661 million and a 45.3% decline in EBITDA to NZ$98 million. Management blamed its poor performance on a number of factors, including the lower birth rate and rapidly changing market dynamics in China.
And while it believes that its revenue could be stronger in the second half, this won't necessarily lead to stronger earnings.
A2 Milk's outlook statement said:
The Company's outlook for 2H22 revenue has improved. It is still expected to be significantly higher than 2H21, and with growth now expected on 1H22 and for FY22, ahead of initial expectations due mainly to growth in China label and English label IMF. However, this revenue improvement is not expected to translate into higher earnings as the Company significantly increases brand and other reinvestment consistent with its growth strategy.
Next month's full-year results certainly will be one of the more interesting releases.
