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TIMBER: Bellamy’s Australia Ltd shares axed on trading update

Suspended infant formula producer Bellamy’s Australia Ltd (ASX: BAL) has returned to trade after a nearly month in suspension on the ASX. An oversupply of inventory and falling sales have caught the company short and the fallout will be felt by investors for months to come, with shares down 35% to $4.30 at the time of writing:

source: Nabtrade

source: Nabtrade

CEO Laura McBain will leave the company, and profits are now forecast to come in some 60% lower than last year. A renegotiation with supplier FONTERRA UNIT NZX (ASX: FSF) has given the company some extra breathing room, and Bellamy’s so far seems to have avoided the massive inventory write-down or capital raising that some may have been expecting.

Further falls could be in store as institutional shareholders head out the door in the coming days.

Either way, there’s no question the market will view the company in a different light in the coming year.

I'd say it's probably best to forget Bellamy's!

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Motley Fool contributor Sean O'Neill owns shares of Bellamy's Australia. The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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