Strong sales growth in Asia helped vitamins and supplements company Blackmores record an 18.6% lift in profit to $70 million for the year to June and reward shareholders with a higher final dividend.
The result was stuck on record revenue of $601.1 million, up 8.9% on the previous year, boosted by a 22% increase in China and 20% growth in the rest of Asia.
Shares in Blackmores ended the day up more than 11.5% at $162, the day’s high.
“Revenue was a record for the group and in the financial year we sold more product than ever in our 86-year history. The strongest growth continues to come from our businesses in Asia, which delivered record sales in June,” Blackmores newish CEO, Richard Henfrey said yesterday.
“Our focus has been on refining our strategic priorities to capture the significant opportunities for our brands and driving stability within the business to enable sustainable growth,” he said. “Our results for the year reflect this focus.”
"Consumer demand across all regions and businesses remains strong and as a result Blackmores invested more in our brands, which will underpin continued growth. Gross margins improved, driven by lower rebates, fewer inventory provisions and operational efficiencies.
Directors declared a fully franked final dividend of $1.55 a share, up 15 cents a share from a year ago.
That took the full year payout to $3.05 a share, up 13% from 2016-17.
The company also revealed it had restarted its dividend reinvestment plan “to support funding of growth initiatives”, an indication the company has plans to step up expansion. That includes the already announced purchase of Catalent Australia’s manufacturing facility in 2019
It says it paid $9 million in what it called the “strategic acquisition of CSIRO-endorsed, clinically trialled weight management (loss) program ImpromyTM and other assets from pharmaceuticals firm Probiotec.
Mr Henfrey said what he termed "supply constraints affected sales during the year across the Group, impacting most brands and markets.
"These had eased by the close of the year and future supply risks will be mitigated by key operational and technology investments which will be embedded over the coming two years.
"The announcement in April of Blackmores’ agreement to acquire the Catalent Australia manufacturing facility in Victoria in 2019 will also enable greater control over production volumes.
Those constraints saw Blackmores sales in Australia and New Zealand, including Pure Animal Wellbeing, remained flat, contributing $266 million.
“The retail environment in Australia remains subdued, though we exited the year with improved momentum and a strong sell-in of immunity products,” according to Mr Henfrey.
Sales to China, comprising key export accounts and in-country sales, rose 22% to $143 million, compared to the prior year.
“Our business in China continues to be predominantly e-commerce sales and Blackmores has strong relationships with the major Chinese platforms. The Blackmores Board visited China in June and attended the signing of a joint business plan with Alibaba.
"This business plan demonstrates our shared vision to grow our presence on Alibaba’s platforms including AliHealth, TMall and Taobao over the coming year,” Mr Henfrey said.
Blackmores sales in Asia (excluding China) were $82 million, up 20% compared to prior year. The company said this includes particularly strong performances from Singapore (up 22%) and Korea (up 91%). Thailand and Malaysia delivered continued growth despite being impacted by supply constraints.
The company’s BioCeuticals, Global Therapeutics and IsoWhey delivered sales of $109 million, up 13% compared to the prior year. "BioCeuticals branded products lifted sales by 20%, with Global Therapeutics’ growth flat as the result of stock shortages impacting our smaller lines. These constraints eased significantly in the final months of the financial year,” the company said.
Looking to 2018-19, Mr Henfrey said the company’s "strategy is focused on delivering growth across all regions and brands, underpinned by our continued investment in our core business in Australia. We will invest to strengthen our business systems as we progress towards ownership of the Catalent Australia manufacturing facility in October 2019.“ (that is in the 2019-20 year)
"China continues to be a significant opportunity for Blackmores and in addition to our Alibaba agreement, last week we signed a strategic co-operation with NetEase Kaola. Our vision for China is not limited to e-commerce sales, and we’re actively building our offline business and affirming our credibility as a leading natural health advocate.”
“The Board shares my confidence in our ability to continue to deliver sales and profit growth in the coming year,” he said.
