Long Term Investors Seek Opportunities in ASX Dairy Sector, Now on a Rebound

With conditions improving across the dairy and nutrition sector,  the following ASX companies with stronger balance sheets and improved operations are creating new opportunities for investors.

The a2 Milk Company Limited (ASX: A2M)

delivered a positive operational update in November as management upgraded FY26 revenue guidance which reflects better than expected results across infant milk formula and other categories.

A2M exited FY25 with solid earnings growth and a strong balance sheet as the company delivered revenue of around NZ$1.9 billion, EBITDA of NZ$274 million and NPAT of approximately NZ$203 million while maintaining a net cash position which provides flexibility for growth.

The company expects FY26 revenue growth in the high single digit range with EBITDA margins of around 15–16% as it continues to gain market share in China.

With a strong brand, improving conditions in key markets and several operational catalysts in place, the a2 Milk Company appears well positioned to deliver steady earnings growth which creates a compelling opportunity for investors.

Bega Cheese Limited (ASX: BGA)

delivered a strong FY25 result as the group continued to execute its strategy of building a leading Australian branded food business.

During FY25, the company made solid progress across its branded portfolio as volumes grew in yoghurt, spreads, white milk and foodservice while several new products such as Dare Protein iced coffee, Dairy Farmers Protein smoothies and Gut Good yoghurt were successfully launched.

Bega reported normalised EBITDA of $202.0 million which increased 23% year-on-year while normalised profit after tax rose 74% to $50.8 million.

The company distributed fully franked dividends of 12 cents per share for FY25 which represents a 50% increase over FY24 supported by stronger operating cash flow and margin growth.

Management has guided to normalised EBITDA in the range of $215 million to $220 million for FY26 and is on track to exceed its EBITDA target of $250 million by FY28 helped by growing international presence.

Synlait Milk Limited (ASX: SM1)

has entered into a binding conditional agreement to sell its North Island assets to global healthcare leader Abbott for approximately US$178 million and proceeds will be used to reduce debt.

FY25 revenue increased 12% year-on-year to $1.8 billion while underlying EBITDA more than doubled to $107.2 million.

Operating cash flow improved to $165.5 million after being negative last year and net debt declined to $250.7 million from $551.6 million in FY24 and is expected to reduce further following completion of the North Island divestment.

The company also completed a major recapitalisation in September 2024 raising $217.8 million from Bright Dairy and the a2 Milk Company which reinforced long-term shareholder backing.

(Source: Company Reports)