The Bellamy’s Australia Ltd (ASX: BAL) share price fell 6% on Wednesday after the infant formula company provided a trading update at its AGM.
Bellamy’s describes itself as Australia’s leading producer and distributor of Australian-made organic baby products, such as infant formula.
In the update, Bellamy’s said its application for Chinese-label infant formula products with the State Administration for Market Regulation (SAMR) is in progress, however, it still does not know when it might be successful.
Due to that uncertainty, Bellamy’s said that its 2019 financial year guidance for Australian-label product sales is unchanged from what it forecast at the time of its 2018 results announcement. The guidance was for revenue growth of up to 10% with the EBITDA margin between 22% and 25% in the second half of the financial year (click here to learn what EBITDA means).
However, Bellamy’s then said Australian label revenue growth would be, “at the low end of the stated 0% to 10% range.” Also, first half sales will likely be 10% to 15% lower than last year, due to a rundown of $10 million to $15 million of inventory, before it rolls out a brand upgrade.
Bellamy’s CEO Andrew Cohen said: “The team remains highly conscious of the continued risks and challenges that face our business, but equally excited by the opportunity for shareholders and we retain confidence in our medium and long-term growth outlook.”
The company has an upcoming investor strategy day on 29 November 2018 to outline its medium-term strategy.
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