No regrets about a weak interim result and lower earnings and dividend from vitamins and well-being group Blackmores.
It says it will increase investment in its key China growth market, enter India within a year and launch a series of new supplements for pets.
These moves are part of a comprehensive overhaul of the group’s strategy unveiled by the company on Tuesday after it confirmed the slump in first-half net profit revealed earlier this month.
Earnings fell 47% to $18.2 million. There’s no dividend with Blackmores saying “cash will be conserved for operations and growth operations.”
The shares fell 1.7% to $68.50.
For the rest of the year, the company has given a head up to shareholders not to expect very much.
“The second-half is expected to be similar to that achieved in the first-half, though the significantly higher costs associated with manufacturing and other factors including Coronavirus will have a material impact on the FY20 result.
“Directors therefore anticipate full-year NPAT will be in the range of $17 million to $21 million,” the company said.
The strategy laid out four key priorities for the group; rejuvenating its Australian operations, drive new growth in Indonesia and India, appeal to the “modern career woman in China”, and make the organisation world class.
“Over the past few months, we have identified opportunities to focus our strategic effort and investments on fewer, more premium brands in a focused group of markets and channels,” Alastair Symington said
“To begin on a path to deliver sustainable, profitable growth over the next four years, we will simplify our operations and increase productivity over time,” Blackmores said.
“We confirm today that the Blackmores Group sales performance in the first-half has been broadly in-line with expectations and our brand health metrics are very strong.” the CEO said in the statement yesterday.
“However, there is acknowledgement that our costs have increased at a greater pace and our structure has become overly complex, which is the responsibility of the new Executive Team to fix.”
“With our renewed strategy we are making clearer choices that set the business on a stronger footing for the long-term that will free the Group to focus on what matters – delighting consumers, improving natural health literacy and prioritising growth.”
“We will step up our investments in Asia by designing natural health care solutions for the modern career woman, strengthen and rejuvenate Australia as the engine and simplify our structure and brand offering. We will leverage our unique manufacturing and partnership capabilities to drive new growth in Indonesia and India and key to this will be to build a world-class global organisation.”
“Together with my new management team, we have established a clear vision for the future of the Group and we are confident our strategic choices will deliver significant long-term value for shareholders,” he said.
That’s a cunning plan by Blackmores management and board – give shareholders and analysts a whole new strategy to focus on and promise while desperately trying to fix the manufacturing problems in Australia and supply worries in China that developed before the COVID-19 crisis erupted.
That should keep the doubters in the market and business media at bay for another year or two.
