China-focused infant formula firm Synutra International has cut its full-year sales and profits guidance following a weaker-than-expected first quarter.
For the three months to the end of June, Synutra saw net sales rise by 22.5% to US$53.6m. However, the group still lowered its full-year sales outlook to a range of $380m to $400m, versus a previous range of $400m to $420m. Net sales hit $342m in the firm's previous fiscal year.
Synutra blamed the weaker-than-expected first-quarter sales on distributors stocking up on its products in the final quarter of the previous year, in order to avoid a planned price increase.
The group also cut its net profit forecast for its current fiscal year, to between $50m and $57m versus a predicted range of $55m to $65m previously. In the first quarter, the group remained in the red, with net losses deepening by 3.5% to almost $9.8m.
Synutra chairman and CEO Liang Zhang said: "Although we are working through a challenging period in the fiscal first half, we continue to be encouraged with our opportunities in the second half of our fiscal year."
QINGDAO, China and ROCKVILLE, Md., Aug. 9, 2012 /PRNewswire-Asia/ -- Synutra International, Inc. (NASDAQ: SYUT), ("Synutra" or the "Company"), which owns subsidiaries in China that produce, market and sell nutritional products for infants, children and adults, today announced financial results for the first quarter of fiscal 2013 ended June 30, 2012.
Mr. Liang Zhang, Chairman and CEO of Synutra, commented, "Our results were lower than anticipated in our fiscal first quarter. With the 15% price increase implemented on April 1st, 2012 for our infant formula products, our distributors and sub-distributors have taken advantage of purchasing products at pre-increase pricing levels, resulting in reduced levels of purchase orders during our fiscal 2013 first quarter. The weak sales orders have also been exaggerated by a seasonal sales slow-down we typically experience during the hot summer months. We believe it will take another quarter for our customers to work through their inventories before we expect higher levels of ordering activity to return in our fiscal second half. As our sales growth accelerates in the back half of the year, we expect to see greater operating leverage related to the price increase that will have a positive impact on our financial performance."
"We continue to make a concerted effort to enhance our direct communications with customers to expand our market position. This interaction is reinforced through our customer support call centers, store promotions activity and local and national television advertising spots. We are also focused on enhancing the yield of our present distribution system through proper resource and incentive allocation for our top-grossing brand series as well as strengthening our sales efforts. China's dairy industry continues to offer compelling growth characteristics and the expansion of our market position is possible over the long term by ensuring the highest product quality, raising our brand visibility and enhancing the productivity of our distribution system."
"We have solid opportunities to expand our market position in powdered milk formulas and generate strong revenue and profit growth in the second half of our fiscal year. Building on our capabilities in dietary supplement ingredients, we are also cultivating other nutritional supplement product opportunities, including chondroitin sulfate sodium products for joint health, within the current fiscal year. We remain confident that our high quality products and strong management capabilities will result in long-term growth for our shareholders."
