Bellamy’s shares have dropped as much as 14.5 per cent after the infant formula maker deferred its medium-term revenue target as full-year profit fell by nearly half.
Profit for the 12 months to June 30 slumped 48.9 per cent to $22.1 million after delays in Chinese regulatory approval and a rebrand that involved a $12 million pre-tax writedown of old-labelled inventory.
It said it remained confident of getting approval from the State Administration for Market Regulations for organic formula from its Camperdown cannery to be sold in the country, but has pushed back its $500 million medium-term revenue target past FY21 due to uncertainty over the timing.
“We remain confident in our growth strategy and medium-term target of $500 million revenue but have needed to defer this target beyond FY21 given the ongoing SAMR registration process,” chief executive Andrew Cohen said in a statement on Wednesday.
“Notwithstanding the timing of this registration, we believe our medium-term target will be achieved through the success of the abovementioned initiatives.”
Investors seemed unconvinced and Bellamy’s shares were 6.1 per cent lower at $7.56 after 40 minutes of trade, having been as low as $6.88 earlier.
The was worth as much as $11.96 as recently in April after Bellamy’s got three Chinese approvals for its non-organic branded formula to be produced at its ViPlus Dairy plant in Victoria.
Bellamy’s has doubled its consumer and trade marketing investment in China as it waits on further regulatory approvals.
Full-year revenue fell 19.0 per cent to $266.2 million but Bellamy’s said its rebrand has helped regain sales momentum.
The Tasmania-based company believes new products including organic ultra-premium formula and an organic goat formula will lead to sustained FY20 growth.
“This reset is now complete and the business enters FY20 with a clean balance sheet, positive consumer momentum and a healthy trade dynamic,” Mr Cohen said.
The company again declined to pay a dividend.