Blackmores has posted a big rise in profit for the first quarter of the financial year driven by demand from Asia for its vitamin pills.
Net profit after tax was $22.6 million, up 161%. Sales were up 65% to $162.2 million in the three months.
Blackmores also announced a partnership with dairy company Bega Cheese Ltd to develop infant formula, another high demand product in China. Bega shares jumped 18% to $5.86 on the news.
A year ago, shares in Blackmores were trading at $31.60. Today it’s the most expensive share on the Australian market. And this just happened:
— CommSec (@CommSec) October 29, 2015
The price briefly bounced to $200 a share before easing back to about $180 each, still up 16% on the day.
The company only joined the ASX200 index – the biggest 200 companies on the ASX 200 by market capitalisation – last September.
Sales to Chinese consumers, both directly and through Australian pharmacy partners, are estimated at $55 million for the quarter, or about one-third of sales.
Chris Kallos, Healthcare Equities Analyst at Morningstar, said Blackmores was “in the right place at the right time”.
“I think what they are doing is quite strategic. Infant formula is an attractive add-on,” he said.
Blackmores is likely to start running into capacity constraints for the production of its existing products. The infant formula business, through a partnership, creates a potential new growth area for the company.
Total Asia sales, at $80 million, are almost half the company’s sales.
“Even excluding China from our results, our group sales would be up 18% reflecting the strong momentum across all of our businesses,” says CEO Christine Holgate.
Marcus Blackmore, the chairman, is listed in the latest annual report to June this year as having 4,268,815 shares in the company, which at $200 would be worth more than $850 million.
And as chairman, he also pulls in about $760,687 a year in salary and incentives.