Chinese infant formula firm American Dairy has reported a third-quarter profit - swinging from last year's third-quarter loss - but a cut to its annual sales forecasts have hit its shares today (16 November).

The company reported net income from continuing operations of US$11.1m for the three months to the end of September - compared to a loss of $22.1m last year - as it continues to build share after last year's melamine scandal.

However, CFO Jonathan Chou trimmed the company's full-year sales targets from $330-360m to $270-290m and said the fourth quarter may not be as strong as it is traditionally.

"We believe it is prudent to adjust our full-year revenue expectation today after reviewing our preliminary October results, combined with recent industry data that suggests that the seasonal strength we typically experience in the fourth quarter may be less than previously expected," Chou said. 

"Additionally, our fourth-quarter comparison is particularly difficult due to the exceptional growth we exhibited last year, in the wake of the melamine crisis."

The revised sales forecast still predicts sales growth of at least 40% but the news hit American Dairy's shares, which were down 19.6% at $26.09 at 11:22 EST.

The melamine outbreak benefitted American Dairy, which was vocal in claiming the business had passed all government inspections on the safety of its products. The company ramped up investment in sales and marketing to bolster consumer awareness of key brand Feihe.

This year's third-quarter sales were also buoyant - almost doubling from $37.2m to $72.1m as the company also continued to expand its distribution network throughout China.

"In the third quarter we continued our focus on expanding our presence, consumer education and quality control," said CEO Leng You-Bin.