Two key Australian players exporting infant formula to China, Bega Cheese and a2 Milk, have moved to differentiate themselves from Bellamy’s, which is now in a trading halt after problems with sales in China.
Both companies saw their share prices suffer earlier this month after Bellamy’s announced a slowing of infant formula sales.
Bega Cheese, a key supplier to the Tasmanian-based Bellamy’s, says its guidance is unchanged. However, the company says it is discussion on supply arrangements and volume forecasts with Bellamy’s.
“At our AGM and in our ASX release on 25 October I spoke about regulation change in China, a global supplier response to demand, the evolution of supplier channels to market, which now sees significant price discounting and signs of short term oversupply of infant formula and growing up milk powders,” says Bega chairman Barry Irvin.
“Whilst infant formula is important to us, Bega is a large multi-product dairy company with a strong ongoing profitable business in multiple categories.”
Bega shares were up 3.4% to $4.01.
The a2 Milk Company also released a statement confirming that the business continues to trade very strongly, reflecting significant year-on-year growth in its infant formula business. Its shares were up almost 6% to $2.06.
Bellamy’s today extended its trading halt to January.
The company has been in voluntary suspension since December 14 while it works on an announcement on the impact of trading conditions on financial results.
Earlier this month the company warned of a road bump in sales because of disruption in China from regulatory changes.
First half revenue is expected to be about $120 million but the second six months could be flat if current trends continue, the company says.
This would put full year revenue at $240 million, well below analyst expectations of about $330 million.
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