Blackmores succumbs to China syndrome but ready for seizure of Indonesia
Blackmores records big profit for third quarter
On Thursday 27 October, 2016, Blackmores reported its first quarter (September quarter) results for FY17.
The group sales of AUD $149 million was 8.1 per cent down on the previous corresponding quarter, and the net profit after tax was down 46.6 per cent to AUD $12 million.
Christine Holgate, Chief Executive Officer, was upbeat: “Though trading conditions were challenging at the start of the financial year, we finished the quarter in a stronger position than we started with improved sales and profitability momentum.”
Indonesia part of a big future
During September, Blackmores launched in Indonesia with encouraging early sales. The current range of 17 products is expected to grow to 29 in more than 1200 retail outlets. An e-commerce presence is planned by the end of FY17.
The fall in performance has been attributed by the company to the reduction of excess stock by Australian retailers and the changing buying patterns of Chinese exporters.
Blackmores estimates that the impact of reducing excess stock to be AUD $17 million, while the impact of the changes to the way exporters buy through Australian retailers is estimated to have depressed the sales by a further AUD $28 million.
CEO Holgate stated: “Blackmores Australia sales were down 40 per cent compared to the prior corresponding period as Chinese exporters transitioned to new channels and Australian retailers worked through excess stock.”
She further explained: “Importantly, consumer demand remains high, though our profit result for the first quarter was impacted by softer sales in Australia primarily as a result of changes in the export market which previously was largely serviced through Australian retailers.”
A fresh approach to growth in China
The company is focused on once more launching its nutritional foods, in partnership with Bega, in the China retail market during the December quarter of FY17 following the recent approval of labels that meet China’s stricter new food labelling regulations.
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