Fonterra Partner Beingmate Braces for Delisting Warning After Wider Loss Forecast
Liao Shumin
/SOURCE : Yicai
Fonterra Partner Beingmate Braces for Delisting Warning After Wider Loss Forecast

(Yicai Global) Jan. 22 -- Beingmate Baby & Child Food Co. [SHE:002570], dairy giant Fonterra's Chinese partner, has advised it may receive a delisting warning after the infant formula maker widened its projected loss for last year.

The Hangzhou-based company pegged the full-year loss at between CNY800 million (USD125 million) and CNY1 billion in a statement yesterday, doubling third-quarter estimates to between CNY350 million and CNY500 million.

Under China's securities regulations, if Beingmate lost money again last year, it will be flagged as a 'special treatment' company and will need to shape up or face delisting. The firm had a loss of CNY781 million in 2016.

Investment partner Fonterra Co-operative Group Ltd. said it was "extremely disappointed" that Beingmate had forecast a wider-than-expected loss, according to media reports in New Zealand. The Auckland-based dairy co-operative, New Zealand's biggest company, bought almost 19 percent of Beingmate for USD553 million in 2015.

Last year's under performance boiled down to a number of reasons, Beingmate said. First and foremost, the company failed to meet its annual sales target. But a rise in market investment thresholds, policies governing formula milk and lower prices amid fierce competition all undermined profit, it added. The company also failed to collect on several receivables and increased its projection for bad debt reserves.

Beingmate made a last-ditch effort to swing into profit in December by proposing to sell 22 properties worth CNY104 million. It sold seven in October and other assets in September.

China rolled out its strictest ever nationwide policy on infant formula in October, which stops companies from flooding the market with products to occupy shelf space and make ambiguous or misleading claims.

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Keywords: Beingmate Baby & Child Food , Special Treatment , PROFIT AND LOSS , Infant Formula