Bellamy’s posted a 47% drop in first half profit to $7.236 million following problems with sales of its organic infant formula in China.
Revenue dropped 12.5% to $118.3 million for the six months to December.
A short time ago, Bellamy’s shares were down 4.7% to $4.26.
The company cut its profit guidance after its spectacular growth via China suddenly stalled late last year following regulatory changes.
The fallout claimed the scalp of CEO Laura McBain, stripped millions of dollars from the market capitalisation and prompted a spill motion against the board of directors, which will be put to the vote next week.
The company now expects full year revenue to be in the range of $220 million to $240 million, at best flat on 2015 and well below previous analyst expectations of about $330 million.
Today the company reaffirmed that guidance and confirmed that a dividend wouldn’t be paid.
Today’s result includes $8.58 million in significant items, including inventory write-offs and restructuring expenses.
This chart shows the stumble in sales growth:
Acting CEO Andrew Cohen says the company is implementing a turnaround program, but it will take some time.
“We are making strong progress with our business plan and have already undertaken several structural improvements aimed at a material reduction in our operating costs and staff numbers have been reduced to a sustainable level,” he says.
The company says it has launched a marketing drive in China and stabilised sales in Australia.
“We are reviewing our supply chain to reduce ingredient costs, consolidating our Australian and Chinese reseller partners and plan to increase the number of stores selling our products in China by 1,600,” says Cohen.
He says Bellany’s is still a leading brand in the Australian and Chinese markets.
“It will be an 18 month journey to return the business to sustainable growth.”