Business site - Savings, Finance & Commerse

Bellamys shares plunge by 44 per cent as the baby formula producer flags weaker sales in china

ORGANIC baby formula maker Bellamy’s share price has plummeted after the company reported weaker sales in China.

As much as 43.9 per cent was wiped from the shares this morning after Bellamys released an investor update flagging softer revenue this year.

Sales on November 11s Singles Day Chinas biggest online shopping event failed to meet expectations, as have sales in China since then, the company said.

We more than doubled revenue growth on Singles Day across all e-commerce platforms compared to last year, chief executive Laura McBain said in a statement. The growth however fell short of our expectations.

Bellamys blamed a regulatory crackdown by the Chinese government, which had triggered discounting by a rival company that were selling off stock in anticipation of losing their export licenses, temporarily eating into its sales.

Chinese authorities tightened regulations of baby formula imports in October, in a bid to increase safety standards and minimise the risk of contamination.

Just nine importers will be accredited under the new system, which will give local brands a stronger position in the market.

The Tasmanian-based company has been a market darling, with its share price rising more than tenfold from $1.60 to a peak of more than $15 last year as it capitalised on the booming Chinese appetite for the clean and green product.

Worth $165 million at the end of 2014, it reached a share market capitalisation of $1.2 billion in the middle of 2016.

But, while the company seemed to be scaling heights, its chairman Robert Woolley and Ms McBain were quietly selling off hundreds of thousands of shares, fuelling scepticism in some corners.

Some analysts questioned the assumption that Chinese demand for Australian-made baby formula would continue at the same levels, while others critiqued the companys mastery of its supply chain.

We believe Bellamys is a well-run company affected by a demand spill-over from China following several food scandals, which has distorted demand for infant milk formula within Australia, Lloyd Moffatt of Religare Institutional Research told Fairfax Media.

We thus believe that the companys revenue growth rate is unlikely to sustain, going forward.

Other baby formula producers were affected by the Bellamys announcement, with Blackmores down nearly 6 per cent this morning, while Bega Cheese and A2 Milk fell 13 per cent.

Bellamys revenue for the first half of the 2016/17 year is expected to be about $120 million and the company said revenue in the second half of the year would be similar if current conditions continue. That forecast would fall short of the previous years annual revenue of $244.6 million.

Bellamys shares were down $4.49, or 37 per cent, at $7.64 at midday (AEDT) on Friday, with more than 12 million shares traded.

With AAP

The ASX 200 finished down 1.0% on Friday to slip 1.1% over the week. Bellamy's Australia (BAL) shares dropped 43.5% after warning of weaker-than-expected sales of its infant formula in China.

Big four banks face questions at parliament inquiry

TEN MPs today will represent millions of angry borrowers when the top executives of the big four banks begin individual grillings by a house committee in Canberra.

Some causes of that anger were identified in a survey commissioned by the Australia Institute released today.

Some 77 per cent of borrowers want it to be compulsory for banks to pass on official interest rate cuts, according to the survey.

And 76 per cent want banks to put the interests of customers ahead of those of shareholders.

The three-hour hearings, starting with the Commonwealth Banks Ian Narev, are the response by Prime Minister Malcolm Turnbull to Labor demands for a royal commission into the finance industry.

About 68 per cent of voters still want a royal commission, according to the Australia Institute survey, but Mr Turnbull believes the hearing before the House Economics Committee will produce greater bank accountability.

The government also hopes the process will boost competition among lenders and make it easier to switch banks and take personal data with you.

Mr Turnbull believes the annual engagements will allow banks to explain their positions, as the Reserve Bank does.

Treasurer Scott Morrison pre-empted the hearings today by announcing tougher regulations to protect benchmarks used in pricing financial products.

But Labor has called the hearings a sham and a mere once-a-year chat in front of a 10-member committee six Coalition, three Labor and one Green.

One of the Labor MPs, Matt Thistlethwaite, already is unimpressed with the hearings. He has said the committee doesnt have the resources, time or powers to properly investigate matters.

These matters would include:

How widespread instances of illegal and unethical behaviour are within Australias financial services industry

How Australias financial services institutions treat their duty of care to their customers

How the culture, ethical standards and business structures of Australian financial services institutions affect the behaviour of these institutions

Whether Australias regulators are really equipped to identify and prevent illegal and unethical behaviour

Mr Thistlethwaite, deputy chair of the committee, said each member would get just 20 minutes to ask questions.

Ive got two days worth of questions I could ask for the Australian public, he said.

Tomorrow it will be the turn of the ANZ bank, and on Thursday a double-header with the NAB and Westpac.

Call for food truck red tape to be cut

THEY’VE only been around for a few years but food trucks — the cooler, more sophisticated cousin of the old burger — have revolutionised the restaurant scene.

But wacky regulations, that differ wildly from council to council, are threatening to stop the trucks in their tracks. In some cases, red tape means food trucks can sell their epicurean offerings on one side of the road but not the other.

Its just one example of mass confusion which has seen Sydney fall behind Melbourne in the number of food trucks and led Labor to demand consistent rules for the trucks throughout the city.

Joe Jackson set up Sydney-based vegetarian food truck Vejoes last month with a $100,000 investment, including the cost of his brightly coloured truck emblazoned with cartoon veggies.

The 26-year-old foodie entrepreneur told he will need to sell a whole lot of Cajun black bean quesadillas and grilled corn to pay off the substantial debt. Its going to be a hard slog but the more I can serve the less of hard slog it will be.

However, Mr Jackson said the multitude of different rules was holding back his business, preventing him from employing more staff and leading to fewer opportunities for food truck fans to try the tasty treats.

Its madness, it took me 12 months of paperwork before I even had the truck in a position to run as a business and then when you start its so inconsistent, said Mr Jackson. Its different from council to council so you have to call every time you want to drive somewhere.


While he can work at events, the bread and butter of food trucks, whether he can set up on busy streets depends on which of Sydneys more than 20 council areas he is parked in.

In the busy inner west suburb of Newtown, Vejoes can sell food on one side of the road but is barred from doing so just feet away on the other side. This is due to the fact the suburb straddles two local authorities with the City of Sydney embracing food trucks and the Marrickville shunning them.

Council fees can also vary from place to place but simpler rules would mean Mr Jackson could rock up at will to busy spots across the city.

Going to the beach would be pretty cool. Wed put speakers on the truck and make a really nice atmosphere and as we dont have an alcohol licence people wouldnt be boozy; theyd just be enjoying the food. But [because of the difficulty] you pretty much dont do street service anywhere else apart from the City of Sydney.

He could also employ more staff. I dont want to work seven days a week but I would want the truck out seven days so Id need people to help me.

Mr Jackson said Sydneys food truck scene was a sorry snag compared to the gourmet banger that was Melbourne: Catch up is an understatement, Melbourne has around 105 food trucks yet Sydney has just under 40, less than half, but everyone I speak to is super excited to eat out of them.

It really does seem like some councils dont want to deal with them. It cant be that hard, he said.

Labor Member of the Legislative Council, Daniel Mookhey, told the Government should take action so Mr Jackson, and others, could get out on the road more often.

The current regulations governing food trucks are just too confusing for operators to understand.

One set code for councils to adopt makes sense. It creates a standard that food truck operators know they have to meet and makes it easy for hungry people to access them, he said.

All of Sydney deserves a thriving cuisine scene and should be able to enjoy food trucks and the great food they serve.


A City of Sydney spokeswoman said some councils were already working with the same regulations, but there was a long way to go.

Parramatta and Liverpool councils are accepting food trucks with City of Sydney permits to trade in their areas and in the future were hoping that other councils will also adopt a form of food truck approvals so that we can have food trucks trading across the borders of Sydney.

Food truck businesses are as small and as local as it gets and when allowed to thrive, they bring incredible innovation to our local communities. Some of the chefs out there are trying out some pretty quirky cuisines and people love it she said.

NSW Minister for Innovation and Better Regulation, Victor Dominello, said the Government was aiming to reduce regulation with a new initiative called Easy to Do Business.

Small businesses make a profound contribution to NSWs economy but are impacted by unnecessary red tape.

The initiative will apply the tell us once approach to government-small business transactions and engages councils with the aim of simplifying licensing requirements for small business across a range of industries.

A Marrickville Council spokeswoman confirmed food trucks were currently banned in the local authority, that covers much of Sydneys inner west, but the decision was under review.

The City of Sydney food truck policy is being looked at as a model for what might be implemented in Marrickville, she said.

Food trucks have become a successful venture for many aspiring chefs. Tyler Florence, host of Food Network's "The Great Food Truck Race," shares tips on launching a successful food truck on Lunch Break with Tanya Rivero. Photo: Food Network

Card limits can hit you hard when you overspend at christmas

INCREASING credit card limits or signing up to a new card can be tempting at this time of year, but experts are warning shoppers to think twice before doing either.

Limits on plastic can start as low as $500. Financial services firm Canstars database shows about one in five cards will approve limits as low as this.

EARLIER: Too late to lock in your home loan interest rate?

This small amount wont suit many shoppers, as the most common credit limit for a platinum card is $6000, however for those consumers who are unaware, there are many cards with no defined maximum limits at all.

Experts warn that choosing a card with a large limit could a slippery slope towards debt woe, when shoppers allow themselves to make large purchases that can bite hard later.
It can also hamper ones ability to gain other lines of credit down the track, says Moneysmarts senior executive leader of financial literacy Miles Larbey.

If you are thinking about increasing your credit limit or taking out a new credit card, the thing to remember is that when assessing your credit limit lenders will look at the total amount of the limit of that card, not just the balance of that card,’ Larbey says.

It can impact your ability to borrow money down the track.

For instance if you have a $10,000 limit on your card, lenders will assess this as if you have a $10,000 debt when you apply for any other lines of credit, regardless of how much you owe on the card.

Latest Reserve Bank of Australia statistics show that as of October, Australians owed a whopping $51.4 billion on credit cards and more than $31.9 billion is accruing interest.

Larbey warns that credit cards should not be seen as free money and cardholders should take their card limits very seriously.

He says consumers can easily get swamped by buying presents and booking holidays in the coming weeks and not worry about the cost until bills strike in late January or early February.

Canstar research manager Mitchell Watson also says credit limits can do you harm without you even realising and its critical not to have multiple forms of plastic because it can give you unnecessary financial grief.

Having multiple credit cards, store cards, interest-free facilities and other personal loans with high limits or existing debt can mean that you have less spare cash available to meet repayments on a new loan and may not be approved for the loan you want,’ he says.