AHF Navigates Vietnam Setbacks Amid China Expansion Push
Australian Dairy Nutritionals reported a 152% surge in nutritional powder sales despite regulatory hurdles in Vietnam, while expanding its Future brand footprint across China.
- Nutritional powder sales up 152% year-on-year
- Vietnam regulatory changes cause stock returns and revenue dip
- Total Q2 FY26 revenue down 19% due to farm exit and Vietnam issues
- Future brand distribution expanded to seven Chinese provinces
- Cash holdings declined to $809k; funding facility expired
Quarterly Financial Snapshot
Australian Dairy Nutritionals Limited (ASX – AHF) has released its Appendix 4C and quarterly update for the three months ending 31 December 2025, revealing a mixed financial performance. The group posted consolidated revenue of $1.4 million for Q2 FY26, marking a 19% decrease compared to the same period last year. This decline was primarily driven by lower milk and livestock sales following the exit from the North Brucknell farm lease and unexpected stock returns in Vietnam due to regulatory packaging changes.
Strong Growth in Nutritional Powders
Despite the overall revenue dip, nutritional powder sales surged by 152% year-on-year to $776,000. This growth reflects increased pipeline and replenishment orders, particularly for the Future brand in China, alongside contract pack sales to key customers. The company’s strategic focus on expanding its presence in the Chinese market is evident, with distribution now spanning seven provinces and plans to reach 1,000 active stores by the end of FY26.
Vietnam Regulatory Challenges
Regulatory and registration changes in Vietnam have posed a significant headwind, impacting packaging compliance and resulting in stock returns. Australian Dairy Nutritionals expects to resume shipments with revised packaging by the end of Q3 FY26. This disruption contributed to the shortfall in total revenue for the quarter but is anticipated to be temporary as the company works through compliance requirements.
Cash Flow and Funding Position
The group reported net cash outflows from operations of $1.11 million for the quarter, consistent with expectations. Cash reserves declined to $809,000 from $1.9 million at the end of the previous quarter. Notably, a two-year funding facility of $1.22 million expired in December, with security over assets subsequently removed. The board is actively assessing capital raising opportunities to support ongoing operations and growth initiatives.
Looking Ahead
Australian Dairy Nutritionals remains optimistic about the second half of FY26, anticipating strong revenue acceleration driven by the continued rollout of the Future brand in China and resolution of the Vietnam regulatory issues. The company’s vertically integrated model, including organic A2 protein dairy farms and infant formula manufacturing in Victoria, underpins its growth strategy in the competitive dairy nutrition market.
Bottom Line?
AHF’s ability to overcome regulatory hurdles in Vietnam while scaling China distribution will be pivotal for its next growth phase.
Questions in the middle?
- How quickly will Vietnam regulatory issues be fully resolved to restore sales momentum?
- What are the company’s detailed plans and timelines for capital raising to bolster cash reserves?
- Can the Future brand’s expansion in China sustain the anticipated revenue growth in H2 FY26?
