Blackmores gets a China boost

Vitamin firm Blackmores has lifted half-year profit 20pc on China sales, but warns the Australian market remains soft.

Blackmores health products.

Vitamin company Blackmores has boosted its sales on the back of demand from China, lifting half-year profit 20 per cent to $34 million, but it warns the Australian market remains soft.

The Australian-listed company (BKL) today reported its group net sales were 9 per cent higher for the first half to $287m, adding it had increased its first half dividend by 15 per cent to $1.50.

“We’ve had two quarters of consistent sales growth and improved our profitability reflecting the delivery of our strategic priorities and greater stability in the business,” Richard Henfrey, chief executive of Blackmores, said.

Mr Henfrey said the first-half performance gave Blackmores a strong foundation for the full year.

“We have delivered an improved sales and profit result whilst investing in growth initiatives,” he said.

“We’re particularly encouraged by the progress of our businesses in China and Indonesia.

“Supply issues affecting the group and the soft Australian retail market will impact us in the second half, though we remain confident we will continue to deliver good profit growth for the full year.”

The report showed that revenue in Australia and New Zealand was $121m, which was slightly down compared to last year, which the company said was because the broader consumer market had remained subdued and China-influenced sales continued to move to its direct China channels

“The impact on the group result was lessened because of the strength of our business diversity, meaning we are less reliant on any single market or brand,” Mr Henfrey said.

China sales grew at 27 per cent with online sales events, including the nation’s “singles day” delivering record sales.

“E-commerce sales of Blackmores products for the November 11 ‘singles day’ promotion surpassed those achieved last year after only two hours and 10 minutes,” Mr Henfrey said.

“Our profit from China grew by 4 per cent for the period after investment in resourcing and operating expenses were made as we expand our in-country presence,” he said.

The Blackmores’ chief said the result in China was impacted by an increase to the doubtful debts provision of $2.8m. He said all appropriate avenues to recover the debts was being progressed.

Blackmores’ other businesses in Asia, including Malaysia, Singapore, Hong Kong and Korea, delivered strong double digit sales growth in the first half.

The half-year result also showed that inventory levels were at $89m, which was a $16m reduction compared to the same time last year.

“Inventory levels have been tightly managed and we’re comfortable not only with the levels of stock held by Blackmores, but also by the amount of stock held by Australian retailers,” Mr Henfrey said.