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Bellamy's shares hit as fresh China roadblock emerges MARCH 30...

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    Bellamy's shares hit as fresh China roadblock emerges

    MARCH 30 2017 - 11:14AM
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    Bellamy's shares hit as fresh China roadblock emerges


    • Brian Robins
    Only a matter of months after Jan Cameron took control of Bellamy's Australia, the company has run into roadblocks in the key China market, with the loss of sales to see earnings take a hit from the start of 2018.
    Following its purchase of Vegemite from Kraft Foods for $486 million earlier this year, cheese maker Bega Australia decided to sell its Derrimut plant to Mead Johnson, the giant US formula business. The Derrimut plant used to supply Bellamy's but its new owners have decided to discontinue the association.
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    The news comes months after Kathmandu co-founder Jan Cameron took control of Bellamy's Australia. Photo: Erin Jonasson
    With the changes to China's registration requirements for infant formula products, this means Bellamy's has to reapply for approvals once it has a new supplier lined up, a process that will take several months at least, Bellamy's told the ASX on Thursday.
    In early trade, Bellamy's shares have been hit hard, falling 7.6 per cent to $4.13 at 11am.
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    "From January 1, 2018, the People's Republic of China will require the infant formula products of the company that are manufactured for sale in [the] PRC to be registered with the [China Food and Drugs Administration], it said. "Bellamy's... PRC products can no longer be registered at Bega's Derrimut canning line."
    Bellamy's said it expects to eventually receive approvals to sell its infant formula product in China once it has finalised negotiations for alternative suppliers, but there will be a lengthy registration and testing regime which will take up to six months to conclude.
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    In the December half, Bellamy's sold infant formula products in China worth $16 million, which was equal to 14 per cent of total revenues.
    A spokesman for the company confirmed it is reviewing the likely impact on earnings, although the impact may be limited as "Bellamy's is actively pursuing strategies to mitigate the extent of any interruptions" to its sales in China, he said.
    Ms Cameron was behind a board spill at Bellamy's which followed a series of senior management at the company after its sales channels into China were disrupted.
 
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