China leads the rapid offshore growth boosting Blackmores’ full-year profit

China leads the rapid offshore growth boosting Blackmores’ full-year profit

Vitamins and supplements giant Blackmores Group’s (ASX: BKL) international expansion is driving profit momentum for the group, with double-digit growth in underlying profit and revenue in China helping boost the bottom line by 7 per cent to $30.6 million.

Blackmores achieved growth across all its markets in FY22, although expansion of its international business means it now accounts for 56 per cent of total group revenue – up from 51 per cent a year ago.

Although its China operations faced a number of hurdles due to extended lockdowns, Blackmores was able to deliver a 10.6 per cent increase in revenue to $145.6 million and an 11.2 per cent lift in underlying EBIT to $16 million from the key international market. China now represents more than 28 per cent of Blackmore’s underlying group EBIT of $56.6 million, a result that has risen 19 per cent in FY22 in constant currency terms.

Strong revenue growth also was achieved in Indonesia and Thailand, up 36.7 per cent and 33.3 per cent respectively, although from a low base.

Revenue from Blackmore’s international business, which now includes India after its entry there last year, has surged 31.8 per cent to $215.7 million. The division’s underlying EBIT rose 43.9 per cent during the year to $29.8 million.

The Australian and New Zealand business, which also faced aggressive discounting by competitors, delivered 7 per cent underlying EBIT growth to $43.1 million despite revenue increasing just 2.7 per cent to $288.2 million.

Blackmores CEO Alastair Symington says the strong FY22 results were achieved despite significant disruption to supply chains and higher input costs.

“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,” says Symington.

“We recorded growth across all three brands (Blackmores, BioCeuticals and PAW) and all markets for the first time in the last four years.”

Blackmores’ profit growth has been supported by a 1.1 percentage point increase in gross margins.

“This has enabled Blackmores to deliver a 22.6 per cent increase in underlying net profit together with a 33.8 per cent lift in the full-year dividend to shareholders,” says Symington.

Blackmores is paying a final dividend of 32c per share, bringing the full-year payout to 95c, fully franked.

The group is forecasting earnings momentum to continue in the current year as it further expands its international footprint.

While the group continues to navigate ‘consumer and trade headwinds’ in China, it says there are signs of consumer demand increasing there as lockdowns are lifted.

Shares in BKL are down 7.2 per cent to $75.53 per share at 12.06pm AEST.

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