Shares in vitamins group Blackmores (BKL) jumped 6% at one stage yesterday after the company revealed a strong rise in third quarter performance.
Sales rose 59% in the quarter to $190 million (or 14% excluding sales to China).
Blackmores said it had more than doubled profits in the three months ended March 31 to $27.3 million, as Asian buyers dominated sales growth, accounting for half the quarterly revenue.
The surge faded in late trading and the shares ended at $152.29, up 3%.
BKL 1Y – Blackmores delivers healthy profit
Yesterday’s quarterly report (Blackmores is one of a handful of local companies to report quarterly) is good news for the company. Blackmores shares have lost 25% of their value in the last month on fears the booming Chinese market might be lost to it by new Chinese e-commerce regulations.
As well investors have been taking profits as the shares reached above $200 each, and then eased. The fall saw a rush of other sales as investors cashed out.
CEO Christine Holgate said in yesterday’s release that the long election campaign in Australia will have little impact on sales of the group’s 600 individual product lines because people regard vitamins and health supplements as essential to their well-being.
“This is our tenth consecutive quarter of year on year growth underpinned by strong top line revenue increases from all regions and brands across the Group resulting in a record bottom line for shareholders,” she said.
“Our continued support for community pharmacy, accredited education programs and investing in new product development have played a key role in retaining the loyalty of our consumers,” Ms Holgate said in yesterday’s statement.
"Blackmores’ Asia in-market sales of $98 million grew at 64% with year to date revenue already exceeding the previous full year,” said Christine Holgate. “Our more established markets across Asia continue to perform. The strength of demand for our brand in Asia is reflected in the growth from Asian shoppers whom we estimate account for 50% of Group revenue.”
“In recent weeks, the Chinese government has announced regulatory developments for cross border e-commerce trading. Blackmores welcomes the focus from the Chinese government on clarifying rules for importing and we believe it is a positive reflection of their commitment to the free trade zones,” Ms Holgate said.
“I am also encouraged to see further opportunity for Blackmores with the announcement of more ingredients approved for sale in the broader retail market in China.”
“It is a characteristic of all markets that regulations evolve. We believe Blackmores is well-placed to manage the constant evolution of the Chinese regulatory landscape with our omnichannel operating model for our China business and our ability to serve consumers through direct and indirect product supply, supported by a highly experienced local team,” she said.
For the nine months ended March 31, Blackmores’ sales jumped 63% to $532 million, while profits more than doubled to $75.6 million from $30.8 million in the first nine months of 2014-15.
Blackmores more than doubled its net profit in the first half of 2015-16 to $48.3 million, so that solid growth has continued in the March quarter.
Sales of Blackmores branded products in Australia for the nine months ended March 31 were up 71% to $369 million, with much of those going to Chinese tourists visiting the major cities and entrepreneurs buying up large quantities and transporting them to China to be sold to locals in what has become known as the “suitcase trade".
The cross-border e-commerce rule changes by China at the start of April were designed to tighten the rules for the importation of products into the country’s free-trade zones which were then sold to Chinese consumers through websites such as Alibaba’s Tmall and JD.com.
