The Bellamy's Australia Ltd (ASX: BAL) share price will be on watch this morning following the release of its full year results.
How did Bellamy's perform in FY 2019?
For the 12 months ended June 30, Bellamy's posted a 19% decline in revenue to $266.2 million. The company's top line was impacted by a deeper than expected level of trade destocking in the third quarter, delays to its SAMR accreditation, a lower birth rate, and increasing competition in China.
Normalised earnings before interest, tax, depreciation and amortisation (EBITDA), which excludes one-offs, fell 33.6% to $46.9 million. And normalised net profit after tax sank 36% to $30.1 million.
One positive was that the company's transformational rebrand has been gaining momentum since its March launch and supported another expansion in its gross margin. That increased from 39.2% in FY 2018 to 43.5% in FY 2019.
Bellamy's CEO Andrew Cohen said: "While FY19 has been a challenging year, and the impact of regulation has been difficult, the changes made during the past year have set a new foundation for the long-term success of our brand. Our transformational rebrand demonstrated strong momentum through the Q4 period. The business enters FY20 with a clean balance sheet, positive consumer momentum and a healthy trade dynamic."
In respect to regulation, the company advised that the process for Camperdown's SAMR registration continues. And while it remains confident that the registration will be achieved and it will join A2 Milk Company Ltd (ASX: A2M) in the China market again in the future, it has deferred its medium-term $500 million revenue target beyond FY 2021 given the ongoing registration process.
In the meantime, management notes that its addressable market and headroom for success within the e-commerce market remains significant.
In FY 2020 it expects 10% to 15% group net revenue growth at an EBITDA margin consistent with the one it achieved in FY 2019 (17.6%). Though, it warned that the majority of its revenue growth is anticipated in the second half following new product launches.
Mr Cohen concluded: "With consumer momentum, higher investment levels, a breakthrough new product pipeline, and a reengaged trade, we expect a return to sustained growth in FY20 and deliver on the promise of this incredible brand."
