Bellamy's predicts H2 2019 sales decline, citing competition in China and inventory clearance

By Cheryl Tay contact

- Last updated on GMT

CEO Andrew Cohen said Bellamy's full-year Australian label revenue growth would be at the lower end of its earlier 0% to 10% estimate.
CEO Andrew Cohen said Bellamy's full-year Australian label revenue growth would be at the lower end of its earlier 0% to 10% estimate.

Related tags: Infant nutrition, Australia, China

Australian infant formula firm Bellamy's has predicted that its H1 sales will fall by 10% to 15% from a year ago, due mainly to the quickening competition among international competitors for the Chinese milk market.

The company announced this at its recent annual general meeting (AGM), triggering a 7% drop in its share price in early trading hours, finishing at US$5.64 (A$7.97).

Its share price has since dropped even further, to US$5.11 (S$7.20) currently.

Bellamy's spent US$7.07M (A$10m) to US$10.6m (A$15m) to clear older inventory before revamping its product range, and pointed to this as another reason for the expected decline in H1 sales.

However, it also told investors that this would be a "short-term trade-off to sales and profit" ​before its product relaunch, planned for H2 2019.

According to CEO Andrew Cohen, Bellamy's full-year Australian label revenue growth would be at the lower end of its earlier 0% to 10% estimate.

NIA-GOED Omega-3 Summit

NutraIngredients, in conjunction with GOED, will be holding APAC's first ever omega-3 event in Singapore in February 2019, featuring renowned speakers from CSIRO, A*STAR, Koure, GOED and more.

Find out how to attend​.

Pressure to perform

At the AGM, he said the firm's management expected a "more challenging FY19 trading environment"​, and "slower China cross-border growth across the category, as well as increased competition in terms of both availability and trade pricing for both local and global competitors".

Still, he highlighted that Bellamy's had developed a reputation as an 'authentic Australian brand' over the last five years, something that would give it a leg up in China.

Presumably, this was meant to reassure the company, after it had issued warnings that delays in securing a permit to sell its products in China stores would impeded revenue growth for as long as two years.

Addressing the attendees, chairman John Ho said: "China is an enormous and complex infant nutrition market and our top priority for the future."

At the same time, investors were reassured that the company "remained confident and respectful of the process" ​but had "no further update on timing".

There was also a presentation to investors at the AGM, detailing the firm's 'doubling down' on its reputation for organic produce, as well as its extended portfolio that included baby cereals, custards, and fruit pouches — all "aligned to Chinese preferences"​.

The company is aiming for a revenue of over US$354m (A$500m) by 2021, focusing on China and the wider Asia region.

While it enjoyed considerable FY18 sales growth​, Bellamy's has been awaiting approval from Chinese authorities for the sale of its Chinese-label products since last December.

Related news

Show more

Related products

Human Bifidobacteria, selected by Mother’s milk

Human Bifidobacteria, selected by Mother’s milk

Morinaga Milk Industry Co., Ltd. | 01-Feb-2019 | Technical / White Paper

Health promoting traits of Bifidobacteria are well-known around the world and its effect is strain-specific, however, whether the residential origin of...

Related suppliers

Follow us

Featured Events

View more

Products

View more

Webinars