A2 Milk shares slid in May, but could now be the time to pounce?

We take a look at how May played out for the ASX 200 dairy company.

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Key points

  • A2 Milk shares dipped into the red in May
  • The infant formula and fresh milk company announced a number of leadership changes early in the month 
  • Looking ahead, A2 Milk has just received good news on the registration of its infant milk formula in China 

A2 Milk Company Ltd (ASX: A2M) shares dropped in May, but could June be a better month?

A2 Milk shares lost 2.4% from $5.43 a share at market close on 28 April to $5.30 each at the end of trade on 31 May. For perspective, the S&P/ASX 200 Index (ASX: XJO) slid 2.98% during the same time frame.

Let's take a look at what impacted the A2 Milk company in the month of May.

What going on at A2 Milk?

A2 Milk produces infant formula and fresh milk with the A2 beta-casein protein, selling its products in Australia, New Zealand, and globally.

A2 Milk shares fell more than 2% on 9 May alone. That's when news emerged the company's US chief executive Blake Waltrip would be stepping down.

The company's Australia and New Zealand executive general manager Kevin Bush was appointed to lead the US arm of the company in the role of managing director. Eleanor Khor stepped up to the role of managing director for Australia and New Zealand.

Meantime, there was also movement at A2 Milk's 75%-owned company Mataura Valley Milk in New Zealand. Mataura Valley CEO Bernard May stepped down with John Roberts appointed interim general manager.

A2 Milk shares also fell on 31 May. A2 Milk's dairy processing partner Synlait Milk Ltd (ASX: SM1) released an updated milk price guidance on the New Zealand Stock Exchange. The company forecast the price of milk for F23 to fall to about $7.60 per kilogram of milk solids. This was 1.2% less than previous guidance.

Looking to June, A2 Milk delivered some positive news on Tuesday that may provide a boost to the company going forward.

A2 Milk's manufacturing partner Synlait has received approval from China for registration of its China-label infant milk formula product.

This will enable A2 Milk to supply infant formula to the Chinese market until 2027. Production is expected to start later this month. A2 Milk had previously listed this registration process among multiple "key risks" for the financial year.

Commenting on the news, A2 Milk managing director and CEO David Bortolussi said:

We look forward to making our upgraded new China label IMF product available to parents and their infants and young children in China, building on the strong brand loyalty we have developed with Chinese families over the past decade as the pioneer and leader of the A2 protein category.

Share price snapshot

A2 Milk shares have gained more than 13% in the last 12 months.

This ASX 200 consumer staples share has a market capitalisation of about $3.8 billion.

Motley Fool contributor Monica O'Shea 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 Scott Phillips.

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