China wipes $20 million from Blackmores profit

BLACKMORES has suffered a dramatic $20 million fall in profit after Chinese personal shoppers turned their backs on the brand.

BLACKMORES has suffered a dramatic $20 million fall in profit after Chinese personal shoppers known as daigou turned their backs on the brand.

The vitamins and nutritional supplements maker has suffered a 41 per cent fall in first-half profit on the back of a slump in Australian vitamin sales, eroding hope of reaching 2016’s financial year result.

Blackmores’ net profit for the six months to December 31 fell to $28.5 million, while its sales revenue dropped 5.6 per cent to $322 million. Sales in Australia were down 31 per cent at $158 million, compared to the previous corresponding period, but returned to modest year on year growth in the second quarter.

Chief executive Christine Holgate said sales in the first quarter were impacted by changes to the buying patterns of Chinese exporters and high stock levels held by Australian retailers.

The company reiterated that its full-year results will not match the 2016 outcome, even though it had improved its sales and profit position in recent months.

“We are encouraged by progress in the second quarter across the group, though the Australian retail environment remains challenging,” Ms Holgate said.

China direct sales were strong, delivering almost $64 million in the half, up 92 per cent on the previous corresponding period. Other Asia sales, excluding Korea, were up 16 per cent.

“The Chinese market is both complex and challenging, though it remains a very important part of our business and we are pleased with our growth,” Ms Holgate said.

Blackmores said it is continuing to focus on reducing and redirecting costs in the business and has increased brand and infrastructure investment to help future growth.

The vitamins maker declared a fully franked interim dividend of $1.30 per share, down from $2.00.

BLACKMORES’ HALF-YEAR RESULTS

* Net profit down 41 per cent to $28.5 million

* Revenue fell 5.6 per cent to $322 million

* Dividend $1.30 per share, fully franked, down from $2.00