Australian food group Beston Global Food Co. (BFC) has warned it will incur “an overall loss” for its full financial year, largely due to a shortfall of sales in China.
BFC did not provide a more precise forecast for its bottom line in the 12 months to the end of June. A year ago, BFC booked a loss of AUD1.7m (US$1.3m).
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The company’s warning came despite a forecast its second-half earnings will rise “significantly”. BFC said it expects its second-half sales revenues to have risen by 20-30% and therefore expects its net profit for the period “to be up by a similar order of magnitude”.
BFC admitted a multi-million deal with Chinese retail giant Dashang Group has not resulted in any sales and conceded no orders were likely in the near future “for reasons which are internal to Dashang”.
Sales from BFC’s operations in China in the second half of the company’s current financial year are not expected to offset the shortfall in sales which occurred in the first half. However, the company was upbeat about its short-term prospects in China, saying it expected to see a “steady growth” in sales in the first half of the 2018 financial year.
Last week, major Chinese seafood importer Shenzen Fresh Life announced it would be signing a deal to buy products from BFC. In addition, BFC has in the past year sourced and distributed Kingfish to China from Clean Seafoods.
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By GlobalDataBFC also pointed to growing demand in China for dairy products, saying Australian dairy product exports having increased by nearly 30% in the past five years.
Adelaide-based BFC is in the process of installing a state of the art mozzarella plant at it Jervois factory, which will enable more cheese to be produced from the same quantity of milk than older technologies. The production capacity of the new plant is 145,000 tonnes per year, with an initial target production of 5,000 tonnes. Meanwhile, production of Parmesan cheese has started, with batches currently being matured at the newly refurbished plant at BFC’s Murray Bridge factory. The cheese will be released to the market towards the end of the 2018 financial year.
Earlier this year, BFC signed a deal to supply seafood and dairy products to Chinese meat group Hondo Food Co., which the company said had seen “low, but modest growth in sales starting from a zero base”. BFC has earmarked additional marketing spend to boost sales via Hondo’s on line channels to help it achieve the contracted sales target of AUD22m by 31 December 2017.
In a separate announcement, BFC announced today it had acquired an additional 70 million litres of milk to support its cheese production after securing an agreement with more than 20 South Australian dairy farmers.
Beston will source 20 litres a year from its own farms and is now in talks with other dairies in South Australia to secure the remaining 10 million litres it needs to meet its 90 million litre target.
“All of the dairies involved have been supplying other national dairy food groups and were looking for alternatives,” BFC’s CEO, Sean Ebert, said. “We are in talks with other dairies in major South Australian milk production areas and expect to reach the target in coming weeks.”
