* Annual profit plunges to A$21.7 million
* A$500 million revenue target deferred beyond 2021
* Investors hoped for quicker turnaround - portfolio manager (Adds details, CEO comment, and updates share movement)
By Byron Kaye and Nikhil Nainan
Aug 28 (Reuters) - Bellamy’s Australia Ltd said on Wednesday it would defer its sales target of A$500 million ($337.70 million) as a Chinese crackdown on imports hammered its annual profit, sending shares of the infant formula maker down nearly 15%.
The annual profit update shows a company once feted for its China exposure being stalled by Beijing on two fronts: new customs rules for e-commerce purchases are crimping informal “daigou” exports, while required health authority clearance for formula is delaying sales from a newly acquired Bellamy’s plant in Australia.
Bellamy’s posted a profit of A$21.7 million for the year ended June, from A$42.8 million a year ago, as sales dropped 19% to A$266.2 million. The company said it expected to miss a sales target of A$500 million for fiscal 2021.
“We hope it is going to be 12 months later (but) we’re just not putting a stated timeline on that at the moment,” Bellamy’s Chief Executive Officer Andrew Cohen said on a call with analysts.
The company added that it was still waiting for an approval from the State Administration for Market Regulation (SAMR) to ship formula to China from a facility purchased by Bellamy’s in 2017. Meanwhile, a new rule requiring online purchases to be cleared through state-approved warehouses was cooling one of its main channels, “daigou”.
“I don’t think it’s necessarily going backwards at a rate of knots. But I don’t think it’s growing at the rate it was prior to that regulatory change,” Cohen said, referring to shoppers who buy high-demand products from outside China and then sell them in the Asian country for a profit.
Shares of Bellamy’s recorded their worst session since January 2017, down as much as 14.5% in morning trade, before settling down 2.5% by mid-session, in a slightly higher overall market.
“The consensus (of analysts) knew that 2019 was going to be the bottom of the toughest years, so they were expecting a huge growth,” said Jun Bei Liu, portfolio manager, Tribeca Investment Partners.
“This is a significant downgrade to consensus earnings.”
Bellamy’s, one of the few Australian exporters from the small island state of Tasmania, said it expects return to sales growth in 2020, up between 10% and 15%, amid product launches.
Earlier in the month, vitamin maker Blackmores Ltd - another bellwether for Chinese demand of Australian goods, which does not need SAMR clearance - posted a steep drop in its annual profit and warned that tough conditions in the mainland would continue.
$1 = 1.4806 Australian dollars Reporting by Nikhil Kurian Nainan and Niyati Shetty in Bengaluru; editing by Richard Pullin, Simon Cameron-Moore and Sherry Jacob-Phillips