We are in the tail end of FY17 now. So BAL have basically announced they will survive the next 5.5 months and make a modest profit. There is no indication of improved sales volumes for those 5.5 months either. However, unless they can resurrect their sales growth, from FY18 onwards they are going to have to cough up tens of millions of dollars in shortfall payments, and will have large interest payments to make on the bank facility they are using to fund working capital. And in case you havent noticed, dairy prices have risen in the last few months which will flow through to higher raw material costs once the six months of existing inventory is used up. This will necessitate a capital raising in the very near future that will seriously dilute existing shareholders. And that is the best case outcome! As for the worst case outcome, ask yourself what happens if BAL has so seriously damaged their brand that sales continue to go backwards in FY18?
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