ONAIR 8223 0000onair [at] fiveaa [dot] com [dot] au
Download the fiveaa app
Baby formula supplier Bellamy's Australia has replaced its chief executive and taken another market beating as it revealed the significant impact lower-than-expected sales in China will have on its earnings.
The announcement of Laura McBain's immediate departure came as a four week suspension on the trading of Bellamy's shares was lifted - and they immediately plunged more than 40 per cent.
Bellamy's share price had already dropped 43 per cent in early December when it first warned of weaker sales in its major growth market of China.
The shares recovered from their initial drop on Wednesday to close $1.33 weaker, down 19.9 per cent, at $5.35.
More than $750 million has been wiped from the company's market value in just six weeks, leaving it at a 16-month low of $464 million.
Ms McBain will be temporarily replaced by chief operating officer Andrew Cohen, a new, interim chief financial officer has been appointed, and the entire executive team is being reviewed, Bellamy's said.
The executive shake up accompanies changes to a key manufacturing contract with Fonterra that will address excess inventory, and a cost cutting program.
"Laura has overseen the growth of the company over the past decade since she joined Bellamy's as general manager in 2006, including the expansion of Bellamy's markets and its brand," chairman Rob Woolley said.
"I would like to thank Laura for her contributions to Bellamy's over the last 10 years."
Bellamy's said its revenue and profitability had been affected by lower-than-expected demand for Bellamy's infant milk formula.
This had led to lower-than-expected sales, increased inventory levels, excess ingredients and shortfall payments to suppliers that are subcontracted to make Bellamy's products.
The company enjoyed a huge jump in revenue, earnings and profit in the 2015/16 financial year, but is now forecasting earnings before interest and tax (EBIT) of $22 million to $26 million in 2016/17 - down from $54.3 million a year earlier.
The earnings forecast includes the impact of shortfall payments to be made to suppliers who require minimum volume commitments to make manufacturing facilities available.
As well as possible class actions from shareholders, Bellamy's is facing pressure from major shareholder Black Prince Private Foundation to replace four non-executive directors.
Mr Woolley has reiterated the board's view that the move by Black Prince is not in the best interests of shareholders, and indicated the company would have more to say on the issue in the coming week.
Tweets from https://twitter.com/1395FIVEaa/lists/sa-list-for-fiveaa-com-au