Blackmores profit dives

BLACKMORES has described 2016 17 as a “rebalancing year” after two years of exceptional growth, this morning reporting a 42% decline in net profit after tax to $58 million. The company was particularly impacted by a slump in sales to Chinese entrepreneurs previously purchasing through Australian retailers, who stopped in response to speculation about potential regulatory changes in China. Blackmores Australia and NZ sales amounted to $372 million, down 23%, due to Chinese tourists and exporters changing buying patterns. Total group sales amounted to $693m, down 3%, with outgoing ceo Christine Holgate saying “after a turbulent start to the year, we are pleased with our recent performance”. She said expenses had been restructured to reflect the current trading environment and tightly managed inventory and cash to finish the year with a strong balance sheet. Holgate said the demand for Blackmores products in China had remained strong, although the route to serve it had changed, with the company responding by strengthening its export team and in-country China business.

Direct China sales rose 71% to $132 million, with Holgate saying the country accounted for about $250m in total including estimated sales through Australian retail.

In Australia the retail environment saw a return to market competition and normalised levels of trading terms, which diminished profits.

Key initiatives included managing costs and investing savings in new areas such as the new online education platform ( 15 Aug).

Newly appointed ceo Richard Henfrey said Blackmores had also invested in a world class distribution centre and new technology platforms that will support anticipated growth, “including additional volumes from our emerging businesses in Asia”.