Blackmores says lower expectations as net profit slides over 40pc

Blackmores has told investors to curb their expectations as it pushes alternative metrics to last year’s performance.

Blackmores chief executive Christine Holgate. (Aaron Francis/The Australian)

Blackmores is setting its sights on a favourable comparison to fiscal 2015 as it struggles to match the “exceptional performance” of last year.

For the three months to March 31, sales at the vitamins group tumbled 8.6 per cent to $173.8 million and net profit skidded 46.8 per cent to $14.5m.

The readings appeared to represent a slowdown from what already appeared a lacklustre first-half, as year-to-date sales for the first three quarters are showing down a more modest 6.7 per cent and net profit is off 43.5 per cent.

Despite the challenges, Blackmores (BKL) chief executive Christine Holgate remained upbeat on the group’s operations.

“The sales trend is encouraging, particularly as we finished the third quarter slightly ahead of our second quarter result despite having fewer trading days,” she said.

“Our profit result for the first nine months was impacted by lower sales in Australia for Blackmores which was compounded by the higher cost of operating in those channels.”

Ms Holgate said the group was focusing on moves to simplify its business as it felt the sting of a shift in spending habits of crucialdaigou buyers.

“Blackmores Australia sales have steadily grown over each quarter of the year,” she said.

“This has still not been enough to make up for the decline in sales through Australian retailers to entrepreneurs selling to consumers in China that so heavily influenced the Australian market in the prior year.”

Its net profit of $43m for the first nine months of fiscal 2017 has it facing a shortfall as against market expectations for a reading of $69.5m.

As previously detailed by the company, it will clearly fail to reach last year’s record result of $100.3m.

In its latest outlook, the group expressed confidence in the medium-term view, but warned investors to lower their expectations after fiscal 2016’s strong showing.

“Continued consumer demand across all core markets, as well as the strong performance of our practitioner businesses and emerging markets in Asia, gives us confidence in our medium-term growth opportunities,” Ms Holgate said.

“The board expects the full year profit will represent good growth on the 2015 financial year, recognising that 2016 was an exceptional performance that we will not match.”

The group reported profit of $46.6m in fiscal 2015.