Bellamy’s cautious despite profit bump as it waits on Chinese license decision

Bellamy’s has affirmed its full-year revenue guidance as it awaits Chinese regulatory approval following first-halt profit leap.

A mum and baby with tins of Bellamy's organic infant formula. (Picture: Troy Snook)

Infant formula company Bellamy’s has reaffirmed its full-year revenue guidance as it booked a bumper first-half net profit.

Revealing a net profit after tax of $22.4 million for the six months to 31 December, compared to $13.2m in the first half last year, the company (BAL) said it’s on track to meet its full-year revenue growth target of within the range of 30 to 35 per cent growth on the 2017 fiscal year.

Earnings before interest, tax, depreciation and amortisation were up $34.9m compared with $19m in the first half last year.

The company did not declare an interim dividend, in line with the same period last year.

It comes as Chinese authorities consider the CFDA license application for its Camperdown manufacturing facility, in which Bellamy’s said it will acquire the remaining 10 per cent if the CFDA application is successful.

The Camperdown facility made an EBITDA loss of $1.4m for the first-half, impacted by a 33 day CNCA license suspension in July and the interval times relating to CFDA registration submissions.

Bellamy’s expects the profitably from the facility to improve in the second half, but maintained its outlook of EBITDA loss within the range of $1m and $2m for the full 2018 fiscal year.

Revenue for the first half increased to $174.9m compared to $118.3m in the same period last year. Revenue for the first half included $18.1m in revenue from its Chinese-labelled products.

The company said that while there is no labelled product forecast in the second half, it has several months inventory within China, anticipated to be sufficient until the application is considered by the CFDA.

“While there are still challenges to navigate, we are pleased to see that our turnaround plan continues to gain traction and the overall health of the business has improved,” said Bellamy’s CEO Andrew Cohen.

“While we recognise these positive initial results, we remain mindful of the inherit risk of dynamic and highly regulated market. Our focus is now on obtaining our CFDA license and executing a long term growth plan.”

Due to minimum annual volume commitments with manufactures and suppliers, Bellamy’s must increase production volume to retain the same level of shortfall payments, the company said.

The forecast assumes the continuation of the same level of minimum annual volume expense as the in first-half.

At 10.43am (AEDT), Bellamy’s shares had falled 96 cents, or 6.06 per cent, to $14.88.