Bellamy's Share Price Jumps On Lift To FY Guidance
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Shares in dairy products group, Bellamy’s jumped more than 6% yesterday as the at times embattled company provided more evidence that it has shaken off its woes and is back on track.
Some investors obviously thought something was coming because up to yesterday morning the shares had risen 25% in the three previous trading sessions.
The company yesterday upgraded its full-year guidance for its core infant formula business and despite singling out the recently purchase Camperdown cannery in Melbourne as a continuing problem, investors sent the shares up 4.6% to end the day at $10.23.
That’s the highest the shares have been since last December when the company sprang a surprise downgrade on investors. The Tasmania-based company forecast revenue growth of 15% to 20% excluding Camperdown, up from its previous forecast of 5% to 10% , and also raised the bottom end of its earnings guidance range to 17% to 20%.
The Camperdown cannery though remains a headache. Since buying it in June Bellamy’s has battled to make it perform and the company is forecasting an earnings loss of between $1 million and $2 million as well as amortisation and other liabilities.
And its on/off problems in China are still bedevilling it.
The company yesterday reiterated its previous advice that second-half revenue would be lower than that in the first half because sales of Chinese-labelled Bellamy’s products would cease due to delays in obtaining China Food and Drug Administration (CFDA ) registration.
“While Bellamy’s sees positive momentum in its core business, there are still challenges to navigate, including CFDA registration, as it implements its turnaround plan,” the company said in yesterday’s statement.
On Wednesday the shares jumped sharply after the company paid a small final to settle an ASIC query. The company said it had paid, “without admission of liability,” an $66,000 Australian Securities and Investments Commission penalty relating to allegations it breached continuous disclosure obligations last year, concerning how its sales numbers were tracking compared with forecasts.
Bellamy’s revealed the payment in a statement to the ASX on Wednesday morning.
"Bellamy's considers that it complied with its continuous disclosure obligations in the period leading up to its trading update of 2 December 2016. The trading update was provided part-way through the company’s half-year reporting period as the impact of relevant sales information became sufficiently definite (including with respect to Bellamy's Singles Day event in China and anticipated flow-on sales)," the statement said.
"Bellamy's has agreed to accept the infringement notice and pay the penalty as a way to conclude the matter (avoid further costs) and allow the company and its management team to focus on the operations of the business and increasing value for shareholders. It is not an admission of liability nor a finding of any breach of law," it said.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.