On 27th February 2019, Bellamy’s Australia Limited (ASX: BAL), which is in the business of manufacturing organic milk and food products for infants, announced its 1HFY19 results. The company reported revenue of $129.64 million in 1HFY19, down by 25.9% from the previously reported revenue of $174.91 million in 1HFY18. Some of the reasons for the declining revenue were the decision to run-down trade inventory prior to the Australia-label rebrand, an observed slowdown in overall category performance.
EBITDA for 1HFY19 also took a hit and reported at $13.98 million which is down by massive 59.9% from $34.85 million, reported in 1HFY18. EBIT decreased by 65.7% from $32.72 million in 1HFY18 to $11.2 million in 1HFY19. [optin-monster-shortcode id="swikrbu1d9j9aq0o4cko"]
Net profit after tax (NPAT) also took a hit and nosedived from $22.4 million in 1HFY18 to $8.13 million in 1HFY19, a massive decline of 63.7%. This has led to a subsequent decline in the earnings per share (EPS) as well. The basic EPS for the 1HFY18 was stated around 21.5 cents per share which reduced to 7.2 cents per share after the decline in the NPAT. Diluted EPS saw an equivalent fall as well and fell from 20.4 cents per share in 1HFY18 to 6.8 cents per share in 1HFY19.
Cash flow from operating activities has reduced significantly from $59.1 million in 1HFY18 to $8.58 million in 1HFY19. This reduction is primarily due to reduced cash receipts from customers (from $166.86 million in 1HFY18 to $124.67 million in 1HFY19) and increase in cash payments to suppliers and employees (from $98.49 million in 1HFY18 to $108.84 million in 1HFY19).
On the balance sheet, the net cash has gone up to $94.8 million in 1HFY19 compared to $87.6 million reported at the end of 2HFY18. The cash conversion has also been improved due to Cyclical phasing of creditor payment cycles and Structural changes in the supply chain as a result of direct sourcing strategy. This efficiency in the cash conversion cycle has reduced the inventory from $90.45 million to $61.03 million in the same period which has resulted in the decline in total assets from $280.81 million in 2HFY18 to $262.04 million at the end of 1HFY19. On the liabilities side, the company has maintained its long term zero debt levels. There is an increase in the short-term provisions from $45 million in 2HFY18 to $58 million in 1HFY19, but the total liabilities have decreased significantly from $73.45 million to $43.99 million in the same period.
The company did not declare any dividend amid 67% fall in profits. However, the outlook given by the company was full of confidence. It is expecting the SAMR to guide up the group revenue after the loss of already delayed registration which was seen evident in the 1HFY19 numbers. The total revenue of the group is expected to touch $275 million - $300 million in FY19.
Amid mixed numbers, the stock price closed almost flat (up by 0.25%) on ASX at A$8.09 as on 27th February 2019. The YTD return of the stock is 6.32%.
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