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UPDATE 1-Bellamy's Australia shares plunge 40 pct after outlook downgrade, CEO exit
January 11, 2017 / 3:11 AM / in 9 months

UPDATE 1-Bellamy's Australia shares plunge 40 pct after outlook downgrade, CEO exit

* 2017 revenue view A$220-240 mln vs A$245 mln in 2016

* Bellamy’s previously forecast revenue growth in 2017

* Laura McBain to step down as CEO with immediate effect (Recasts on share price, adds company quote and context)

SYDNEY, Jan 11 (Reuters) - Shares in Bellamy’s Australia Ltd plunged more than 40 percent on Wednesday after the infant formula maker cut its 2017 revenue forecast and said Laura McBain would step down as chief executive officer with immediate effect.

Bellamy’s also said its profit margin would narrow in 2017 on lower-than-expected sales, disclosed an inventory writedown, and detailed a renegotiated milk supply deal with New Zealand’s Fonterra Co-Operative Group Ltd.

“Revenue and profitability have been impacted by lower than expected demand for Bellamy’s infant milk formula, which has also led to increased inventory levels, excess ingredients and shortfall payments to suppliers,” Bellamy’s said in a statement.

In August, Bellamy’s projected revenue growth for 2017. It now expects revenue of A$220 million ($162 million) to A$240 million, rather than the flat A$240 million it forecast in December. That would compare with 2016 revenue of A$244.6 million.

Bellamy’s also said it expects earnings before interest and tax to halve, from A$54.3 million in 2016 to a projected A$22 million to A$26 million in 2017.

Investors had been bracing for a hit to earnings since Bellamy’s on Dec. 2 said new import rules in China would prompt exporters to dump stock, leading to a glut and hurting its shipments.

Its share price plunged more than 40 percent on that news and, since Dec. 12, the stock had been in a trading halt pending an “updated announcement” on the financial effects of the glut. Trading resumed on Wednesday.

Bellamy’s said it has temporarily replaced McBain as CEO by Chief Operating Officer Andrew Cohen while the board searches for a permanent successor. ($1 = 1.3567 Australian dollars) (Reporting by Tom Westbrook; Editing by Christopher Cushing)

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