By Stephen Wright

WELLINGTON, New Zealand--Infant formula company a2 Milk Ltd. has cut its full-year earnings forecast, citing a more severe-than-anticipated decline in surrogate-shopping sales to Chinese consumers.

Shares of the company, which before the downgrade was the third-largest in the New Zealand market by capitalization, slid more than 20% on Friday, dragging the benchmark index into the red.

The company said it expects an operating profit margin of 26% to 29% for its 2021 financial year, down from its previous forecast of 31%.

Revenue for the full year would range between 1.4 billion New Zealand dollars and 1.55 billion New Zealand dollars (US$1 billion to US$1.11 billion), compared with an earlier forecast of NZ$1.8 billion to NZ$1.9 billion, it said.

Pandemic-related disruption in Australia to daigou--surrogate shopping--sales "has proved to be more significant and protracted than was previously anticipated," a2 Milk said.

The fall in the company's share price wiped more than NZ$2.3 billion from its market value.

For the medium term, a2 said it still expects to achieve an operating profit margin of about 30%.

Write to Stephen Wright at stephen.wright@wsj.com

(END) Dow Jones Newswires

12-17-20 2130ET