Baby food maker Bellamy’s ousts top executives

Bloomberg

Bellamy’s Australia Ltd., the infant formula maker whose market value ballooned in 2015 amid surging Chinese sales, ousted its two top executives after forecasting plunging profits. The stock fell the most on record in Sydney.
Bellamy’s has racked up stockpiles of unsold infant formula and excess ingredients after making overambitious revenue estimates, the Launceston, Tasmania-based company said in a statement to the stock exchange. Chief Executive officer Laura McBain and Chief Financial Officer Shona Ollington have stepped down.
The announcement breaks a month of silence from Bellamy’s on the state of its business following negotiations with suppliers and manufacturers, among them dairy companies Bega Cheese Ltd. and Fonterra Cooperative Group Ltd.
Bellamy’s has now amended its manufacturing agreement with Fonterra, extending a five-year contract by three years and limiting purchase commitments.
Earnings will be about half what analysts expected. Operating profit for the year ending June 2017 will range between A$22 million and A$26 million, Bellamy’s said. The stock fell as much as 44 percent as its shares came out of a month-long trading halt.
Bellamy’s stock previously plummeted almost 44 percent on Dec. 2, when the company disclosed what it called a “temporary volume dislocation” in China. Days later, the company suspended shares from trading as it attempted to grasp the impact on earnings. After listing in August 2014, Bellamy’s stock soared more than 15-fold in little more than a year to A$15.48 as Chinese consumers flocked to the company’s organic baby formula and food pouches for infants. Even when China said it was tightening import and registration regulations last April, Bellamy’s said it was “confident” the new rules wouldn’t hurt sales.