Blackmores’ full year growth dragged down by sluggish China performance and rising costs

By Tingmin Koe

- Last updated on GMT

Blackmores released its full year financial results in its AGM held earlier today. ©Getty Images
Blackmores released its full year financial results in its AGM held earlier today. ©Getty Images

Related tags Blackmores Australia financial report

A lacklustre China performance and rising operating costs have dragged down Blackmores’ full year net profit by 24% to $53m.

The Australian health supplements giant announced its full year financial report during an AGM meeting held earlier today.

While full year revenue is up by 1% to $610m, net profit after tax continues to decline, down to $53m this year.

This is 24% lower yoy and only about half of what the firm had achieved three years ago ($100m).

Gross margin also dipped to 60%, which is four percent lower than in 2016.

Acknowledging that it has “lost momentum”,​ the firm made three key observations affecting growth, including stagnation in Australia, dipping net sales in China due to channel shift, and increasing cost of operations.

While net sales in the ANZ markets continue to grow to $228m, its full year revenue is only $1m higher than last year at $267m.

In China, net sales plummeted to $162m, which is about $100m less than three years ago.

Despite this, the firm said in-country business in China delivered strong results, with revenue up by 22%.

The firm also acknowledged the need to improve current margins, which is 5% less than key competitors (63%).

Strong growth in SEA

The firm’s overall performance was cushioned by positive growth in other parts of Asia. Revenue from across Asia markets, excluding China, went up by 30% to $107m, while EBIT was up by 218%.

Growth momentum was notably strong in Vietnam, Indonesia, and Korea, where revenue jumped by 157%, 90%, and 28% respectively.

BioCeuticals, which is another business unit of the firm operating from Australia, also saw a 4% growth in revenue, hitting $113m.

The arm remains a “clear market leader in practitioner-only products”​ and has a strong pipeline of new products.

The new products included extensions to Armaforce, Ultra Muscleze, and a focus on DNA clinical services.

Meanwhile a medicinal cannabis trial is underway. 

New appointments

New appointments across different business units were also announced at the AGM meeting.

Ayumi Uyeda is appointed MD of Blackmores Australia and New Zealand, while Kitty Liu is made the MD of China.

Blackmores International, on the other hand, will be led by new MD Dean Garvey.

Earlier on, the firm also completed the acquisition of Catalent Australia’s Braeside facility at the price of $33m.

More than 50% of the products across Blackmores Limited will be produced from this facility.

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