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- Blackmores (BKL) is down slightly on the market today after revealing that its underlying net profit had fallen by 47 per cent to $18 million
- This is a significant decrease for the health and vitamin company who reported a FY19 half year result of $34.3 million
- Blackmores also reported a drop in revenue by five per cent, from $319 to $302 million
- It credits these drop in figures to the coronavirus impacting China sales
- The company will now focus on strengthening its Australian business and driving growth in Indonesia and India
- Blackmores share price has dropped a slight 0.34 per cent today with shares trading for $69.48 each
Blackmores (BKL) is down slightly on the market today after revealing that its underlying net profit had fallen by 47 per cent to $18 million.
This is a significant decrease for the health and vitamin company who reported a FY19 half year result of $34.3 million.
The company also reported a drop in revenue by five per cent, down from $319.4 million to $302.7 million from the prior corresponding period (pcp).
These figures are in-line with those predicted on February 12, which Blackmores credits to the coronavirus impacting its China sales.
According to the company some e-commerce partners have cancelled or modified their February stock and Blackmores has experienced a slowdown of China inbound and exporting freight.
This has made it difficult for Blackmores to serve local market demand with their products.
As a result of this revenue in the China segment was $62 million, down six per cent on FY19’s $65 million. Earnings before interest and taxes (EBIT) was also down 58 per cent to $5 million.
Blackmores will now focus on strengthening its Australian business and driving growth in Indonesia and India.
“With our renewed strategy we are making clearer choices that set the business on a stronger footing for the long-term that will free the group two focus on what matters – delighting customers, improving natural health literacy and prioritising growth,” CEO Alastair Symington commented.
For its Australian growth, Blackmores is focused on growing top-line revenue in complementary medicine as well as establishing improved profitability.
The company will develop a superior consumer experience, build capabilities in strategic revenue management, and expand to a broader customer base including pet care.
While Blackmores is yet to fully capitalise on its Pure Animal Wellbeing (PAW) brand, it is still seen as the leading pet supplement brand in Australia.
Pet care represents a growth opportunity for Blackmores in Australia’s $4 billion market. It also represents a rapidly growing opportunity in China with the market forecast to be $39 billion by 2024.
Further expansion of PAW by Blackmores into China and other key international markets is currently under review.
According to PWC Global, India and Indonesia are projected to be the second and fourth largest economies by 2050, respectively.
In Indonesia, Blackmores business and joint-venture with Indonesian company, Kalbe Farma, is performing ahead of expectations and is delivering strong year-on-year revenue growth.
This partnership is continuing to provide local knowledge, infrastructure, distribution and on-ground access to new channels to grown its Indonesian market expansion.
After the completion of extensive research and planning, Blackmores will begin its test market starting in the 2021 financial year.
Blackmores expects revenue in the second-half to be similar to that achieved in the first half. However, the significantly higher costs associated with manufacturing and the impact of the coronavirus will have a material impact on the FY20 result.
Directors therefore anticipate full-year net profit after tax will be in the range of $17 to $21 million due to higher manufacturing costs.
Despite these challenges, the Board and management team are very confident and optimistic about the long-term future of the company.
Blackmores share price has dropped ever so slightly today with shares trading for $69.48 each at 1:32 pm AEDT.
