PRESSURE ON BELLAMY'S TO EXPLAIN FORECASTS

Written on the 12 December 2016 by James Perkins

PRESSURE ON BELLAMY'S TO EXPLAIN FORECASTS

BELLAMY'S Organic has entered a trading halt pending a new company announcement this morning as it deals with huge pressure to explain its earnings forecasts.

There are question marks over who knew what and when at Bellamy's (ASX:BAL) following its 2 December guidance that sent the stock into a freefall, from $12.09 per share at open to $6.85 at close.

Around $500 million value was wiped off the baby formula manufacturer's market cap after the update, which detailed a "temporary volume dislocation" in its China sales channels because of regulatory issues.

CEO Laura McBain and chairman Rob Woolley sold millions of dollars' worth of shares on 29 August at $14.55 per share, fuelling further speculation about the timeline of events leading up to the December announcement.

The ASX asked Bellamy's to explain itself on 6 December and the company responded saying that the information contained in the business update came to light at a board meeting on 22 November.

At that time, the board commissioned further financial information regarding forecast revenue and earnings to be considered at the second board meeting, on 2 December.

The board viewed the updated information and a draft ASX announcement that had been prepared at 8am, then the final announcement was released around 10:12am.

Bellamy's disappointing forecast came after both Blackmores and Murray Goulburn encountered disappointments in targeting the Chinese market with their own baby formula offerings.

There are reports today suggesting that Bellamy's has lost significant market share to rival A2 since April this year.

 

 
Author: James Perkins Connect via: Twitter LinkedIn

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