BLACKMORES BLINDSIDED BY CHINESE MARKET DISRUPTION

BLACKMORES BLINDSIDED BY CHINESE MARKET DISRUPTION

BLACKMORES' (ASX: BKL) profit has taken a 42 per cent hit after significant disruption to its Chinese supply chain "came without warning" in early FY17.

Speculation about regulatory changes in China impacted the buying patterns of Chinese entrepreneurs and tourists who were previously purchasing through Australian retailers.

As a result, Blackmores' full year sales dropped three per cent to $693 million and total net profit after tax reached just $58 million, down 42 per cent on the prior year.

The company was also affected by an unforgiving Australian retail environment, which diminished profits further and dragged EBITDA down 37.8 per cent to $94.6 million.

Outgoing CEO Christine Holgate, who was succeeded in mid-August by Richard Henfrey, said the company began turning its woes around by the end of the financial year.

"After a turbulent start to the year, we are pleased with our recent performance," said Holgate.

"The demand for Blackmores products in China remained strong throughout the year although the route to serve it has changed significantly.

"Blackmores responded quickly to the changes in the market by both building a new China export team and strengthening our in-country China business and tightly managing our inventory."

In the year ahead Blackmores will continue to build on its bioceuticals brand and invest in new technology which will support growth.

Current CEO Richard Henfrey expects the company's Asian assets will flourish in the year ahead. These include Indonesia, where Blackmores recently launched a range of products, and Vietnam.

"Our underlying performance has improved as the year progressed," says Henfrey.

"We have invested in a world-class distribution centre in western Sydney and in new technology platforms that will support the growth we anticipate, including addition volumes from our emerging business in Asia."

Blackmores has declared a final fully franked dividend of 140 cents per share which takes total dividends to 270 cents, down 34 per cent from last year.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Looking for a credit or charge card that’s built for your business? Try American Express
Partner Content
A good credit card should work for you, not against you, and let you and your business ...
American Express
Advertisement

Related Stories

Court throws out ASIC's $22m case against CBA as judge slams ‘form’ over ‘substance’

Court throws out ASIC's $22m case against CBA as judge slams ‘form’ over ‘substance’

The corporate watchdog has failed in its $22 million civil action a...

Watchdog sues Nuix alleging breaches of disclosure and directors' duties

Watchdog sues Nuix alleging breaches of disclosure and directors' duties

The Australian Securities and Investments Commission (ASIC) is taki...

E-commerce aggregator Una Brands closes $45m Series B

E-commerce aggregator Una Brands closes $45m Series B

E-commerce company Una Brands has today announced it has raised $45...

Study finds cybersecurity skills gaps on boards as Optus debacle rolls on

Study finds cybersecurity skills gaps on boards as Optus debacle rolls on

As the backlash continues over a data breach at Optus that has pote...