Chinese boom feeds formula maker's profit

Bellamy's has quadrupled its annual profit to $38.3 million after ramping up production of its organic baby formula to meet strong Chinese demand.

A focus on online shopping and a strong social media presence is helping Bellamy's Australia capitalise on China's insatiable appetite for baby fomula and food.

The Tasmanian-based organic baby food maker's profit more than quadrupled in the year to June 30 to $38.3 million, as revenue from China soaring by similar levels to $62 million.

Sales in Australia rose 67 per cent to $179 million, giving it total revenue growth of 95 per cent.

Bellamy's said it has ramped up its exports while growing its social media and online presence in China, which has boosted its brand awareness.

"China is growing and the opportunity over there remains significant," Chief executive Laura McBain said.

"We are also working with distributors who sell directly on the online Chinese platforms."

More and more Chinese parents are buying online, and Bellamy's is capturing a growing portion of the e-commerce market through Chinese online shopping platforms, including Tmall and JD, she said.

The company has been trading in China for the past seven years, and estimates its share of the country's infant formula market is less than one per cent, while its online share is about three per cent.

Product agreements with manufacturers Fonterra and Tatura Milk Industries means Bellamy's was positioned well for further growth, Ms McBain said.

There is also significant growth in organic milk flow with more farmers keen to jump on the organic trend, she added.

"We have seen farmers across Australia look at the organic opportunity and being legitimately prepared to convert their farms into organic farms," she said.

"In Europe, we are seeing farmers who are already organic acquiring more land to meet the demand."

She said Bellamy's plans to invest $15-$20 million in its products, staff, marketing and promotions to grow the brand in the year ahead.

Bellamy's shares gained 13 cents to $13.50.

BELLAMY'S PROFIT SOARS ON CHINESE BOOM:

* Net profit of $38.3m, up from $9.1m

*Revenue up 95pct to $244.6m

* Final dividend up 4.94 cents to 7.8 cents


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Published 19 August 2016 5:18pm
Source: AAP


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