January 25, 2018

Fonterra "disappointed" with Beingmate's negative forecast
 

China's Beingmate Baby and Child Food Company has expanded its loss forecast for 2017, to the disappointment of its New Zealand partner, Fonterra Co-operative Group, the South China Morning Post reported.

The latest forecast raised expected losses from RMB350-500 million (US$54.66-78.5 million) to between RMB800 million (125.6 million) and RMB1 billion (US$157 million). 

Fonterra holds a 18.8% stake in Beingmate, for which it paid US$553 million in 2015. The co-op said that it is "extremely disappointed" by the recent announcement and Beingmate's current performance. It added that it will seek more information on the forecast and "will consider financial implications" on its investment in light of its upcoming interim financial results.

Beingmate, which is based in Zhejiang, has struggled with falling sales in the past years as it faces strong competition foreign brands, according to the South China Morning Post.

One of the top Chinese dairy producers, the company was once considered a "top dairy stock on A share" when it reported a net profit of RMB721 million (US$113.2 million) in 2013, positioning it as the number one Chinese brand in the sector at the time.

With its revenue and profit mired in a downtrend since 2014, Beingmate now has to grapple with the possibility of delisting as it is about to report a net loss for a second consecutive year.

The company is hoping that China's new and stricter milk powder registration rules, which kick in this year, will lead to a industry shakeup and provide opportunities for revenue growth as there would be less players.

- South China Morning Post