Blackmores’ financial performance a record for the year

Blackmores says its $601 million revenue for financial year 2017/18 is a record, up nine per cent on the previous year and delivering a net profit after tax of $70 million, a 19 per cent increase on 2016/17.

“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,” CEO Richard Henfrey said. “Our results for the year reflect this focus.

“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 says that with consumer demand across all regions and businesses, it invested more to help underpin its continued growth. Gross margins improved, driven by lower rebates, fewer inventory provisions and operational efficiencies.

According to Blackmores, supply constraints affected sales during the year across the group, affecting most brands and markets. These had eased by the close of the year, it says, and future supply risks will be mitigated by key operational and technology investments that will be embedded over the coming two years.

Blackmores says its agreement, signed in April, to acquire the Catalent Australia manufacturing facility in Victoria in 2019 will also enable greater control over production volumes.

The company reports that although Blackmores sales in Australia and New Zealand in FY18, including Pure Animal Wellbeing, remained flat, contributing $266 million, Blackmores was the clear number one brand in Australia and secured recognition in the Reader’s Digest Trusted Brand survey as the most trusted brand in the vitamins and supplements category for a 10th consecutive year.

“The retail environment in Australia remains subdued, though we exited the year with improved momentum and a strong sell-in of immunity products,” Mr Henfrey said.

Sales to China, comprising key export accounts and in-country sales, were $143 million, up 22 per cent compared with the previous year. Blackmores says consumer demand is strong across all e-commerce platforms, while the company’s sales channels in China continue to evolve.

“Our business in China continues to be predominantly e-commerce sales and Blackmores has strong relationships with the major Chinese platforms,” Mr Henfrey said. “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.”

Blackmores says it will acquire the Impromy weight management product portfolio for $9 million in November 2018.

BioCeuticals, Global Therapeutics and IsoWhey delivered sales of $109 million for FY18, up 13 per cent compared with the previous year.

“BioCeuticals branded products lifted sales by 20 per cent, with Global Therapeutics’ growth flat as the result of stock shortages impacting our smaller lines,” Mr Henfrey said. “These constraints eased significantly in the final months of the financial year.

“Across the group, expenses were tightly controlled to enable investment in growth initiatives. These investments included growing the team in Indonesia, launching a world-class education platform, the fit-out of Blackmores’ distribution centre at Bungarribee in western Sydney, and increased brand support in China.”

Blackmores gave a final dividend of 155 cents per share, bringing total ordinary dividends for the year to 305 cents per share (fully franked), 13 per cent up on the previous year.

The company’s dividend reinvestment plan has been reactivated to support funding of growth initiatives, including the acquisition of Catalent Australia’s manufacturing facility.