Blackmores profit slumps, execs miss pay rises

Blackmores shares dropped below $100 after the vitamin maker revealed a sharp fall in earnings and a hit to executive pay.

Blackmores chairman Marcus Blackmore.

Blackmores shares have dipped on the Australian market after chairman Marcus Blackmore revealed a sharp fall in first quarter profit, which has also hit executive pay.

Shares in the company (BKL) slumped as much as 6 per cent at $98.55 as the first quarter results were released ahead of the company’s annual general meeting today, before recovering to close in the black.

The company reported that first quarter group sales were down 8.1 per cent to $149 million and net profit after tax dropped 46.6 per cent to $12m.

Blackmores’ executive team will not get a salary increase for the first-half because of the results.

Chief executive Christine Holgate said consumer demand remained high but the first quarter profit was hit by softer sales in Australia. She said the weaker sales in Australia were on the back of changes in the export market, which was previously serviced through Australian retailers.

“The lower Australian sales impacted our ability to recover the cost of our operational infrastructure, which is reflected in our lower earnings before interest and tax,” she said.

“It is important we continue to focus on adapting our business and continuing to invest for longer-term growth.”

Christine Holgate

The company’s China business recorded a 220 per cent jump in sales to $31m, while Australian sales were down 40 per cent to $68m.

Mr Blackmore added that the company did finish the quarter in a stronger position than when it started and while it did not expect to match last year’s $100 million profit, it had an encouraging sales trajectory and had not stopped investing in future opportunities.

He also told shareholders at the meeting that the executive team had chosen not to take a salary increase for the first half.

“Foreseeing the challenges of quarter one, our executive team sought to reduce costs and review our cost base. In the spirit of this process, they have not only considered the expenses they manage in their divisions, they have also foregone their own salary increases for the first half of the year,” he said.

Ms Holgate said the second quarter had shown improving sales and profit trajectory and that there were positive sales trends that indicated overstocking was easing.

“At this stage we anticipate a stronger second quarter compared to the first quarter sales and profit.”

At the close of trade, Blackmores shares were 1.29 per cent stronger, at $105.74 apiece.