Investors dump Blackmores amid outlook concerns after profit jumps 7pc on record growth across all brands

Record growth in vitamin sales at Blackmores hasn’t helped CEO Alastair Symington convince the market about the future.

Blackmores shares slumped 10 per cent on Thursday – despite the company reporting record growth and a rise in revenue in key markets – after chief executive Alastair Symington refused to be drawn on future earnings.

“We are not giving guidance for the market because of the macro situation and the economic uncertainty,” said Mr Symington, before adding, “I’m confident we will still navigate through high inflation and geopolitical issues.”

Mr Symington said the company produced record growth across its Blackmores, BioCeuticals and PAW brands and across all markets, something it last achieved four years ago.

Net profit increased 7 per cent to $30.6m for the year ended June 30, while underlying profit after tax increased by nearly 23 per cent to $31.1m. Revenue rose 12.8 per cent to $649.5m, with the breakdown showing 2.7 per cent growth from Australia and New Zealand, while international revenue rose 31.7 per cent. China – broken out separately – rose 10.6 per cent.

“We are pleased to deliver a strong financial result during a period which continued to be impacted by the ongoing effects of Covid-19 and significant disruption to supply chains and increased input costs,” said Mr Symington on Thursday.

“The resilience of our business model, together with the strength of our brands and distribution channels, have enabled the group to respond to these challenges to deliver top line growth along with further margin expansion.”

Blackmores produced record growth across its Blackmores, BioCeuticals and PAW brands and across a dozen markets including Australia, Singapore and India.

Blackmores has been battling its biggest supply chain crunch in quarter of a century as a result of the pandemic continues to make its impact felt.

JPMorgan said the lack of detail about future earnings meant and the ongoing issues with supply would lead to downgrade to earnings consensus for the current financial year from the 48 per cent underlying earnings per share growth that had been factored in.

“The company did not provide a quantified outlook but highlighted supply chain disruption, COVID-19 lockdowns, higher inflation and dampening consumer confidence,” JPMorgan analyst Russell Gill wrote in a note. “While the FY22 result was in line with expectations, the lack of quantified FY23 outlook and concerns on consumer confidence will likely see consensus trim forecasts.”

Mr Symington told analysts that it had increased its inventory levels – which had fallen during the peak of the pandemic – back to normal levels and was happy with the production levels at its Braeside factory, where it manufactured 60 per cent of the company’s total volume of soft gel capsules and solid dose tablets.

The company found $17m of annualised gross cost savings last year and Mr Symington said it was “on track” to reach its target of $55m by the end of the current year. Underlying earnings before interest and tax rose 19 per cent to $56.6m.

In Australia and New Zealand, the company said it retained its number one position in key segments and increased revenue in the second half of the financial year as consumers returned to the shops post lockdowns and as cold and flu season kicked in.

Blackmores recently began exporting to India to further diversify its international markets from China and accelerate its plans to reach one billion consumers by 2025. These efforts appear to have paid off in the most recent year, with revenue growth of 36.7 per cent in Indonesia and 33.3 per cent in Thailand.

The group declared a fully franked final dividend of 32c a share, which takes dividends for the year to 95c a share, fully franked. That’s up 33.8 per cent from last year.

Blackmores shares closed down 10 per cent to $73.19 in a slightly lower market.