Ongoing regulatory delays coupled with increased domestic competition and a slowdown in Chinese cross-border market growth are expected to restrict Bellamy’s Australian revenue growth to 10 per cent in 2018/19.
Chief executive Andrew Cohen said the pending registration of Bellamy’s Chinese-label formula products, sold exclusively in offline channels in China and contributing 6 per cent of FY18 sales, would be important to concluding the turnaround of the business.
The infant formula maker swung to a profit of $43.27 million for the year to June 30, from an $809,000 loss in the previous year, helped by higher sales and cost savings.
Revenue rose 37 per cent to $328.7 million, despite zero sales of its Chinese label formula in the second half of the 2018 financial year.
The company did not declare any final dividend.
Bellamy’s is still awaiting regulatory approval for its China-labelled product, for which it had applied for through its Camperdown manufacturing facility, with the country’s State Administration for Market Regulation (SAMR) in December 2017.
Worries about delays in the regulatory approval, and its likely impact on earnings, have pushed Bellamy’s market value lower over the past few months.
Shares had more than halved from a peak of $23.07 in March, to a 12-month low of $9.10 in mid August.
Mr Cohen said the medium to long term outlook remained compelling, supported by category fundamentals, future brand and channel opportunities.
“We continue to plan and organise for a winning model in the China offline channel,” Mr Cohen said.
Bellamy’s shares initially dropped as much as 9 per cent on Wednesday, but rallied subsequently.
By 1215 AEST, the shares were up 7.3 per cent to $11.94 in a firm Australian market.
BELLAMY’S FY18 TURNAROUND
* Net profit $43.27 million vs $809,000 loss year ago
* Revenue up 33pct to $328.7 million
* No dividend, unchanged