Blackmores posted a record half-year profit of $48 million, a rise of 160%, on scorching demand for its vitamins in China and Asia.
The result was on a 65% jump in sales to $341 million. Expenses grew 53% to $273 million, reflecting the cost of raw materials and freight needed to support the strong growth.
Shareholders were rewarded with a $2 a share fully franked dividend, almost triple the 68 cents of last year. A short time ago, Blackmores shares, the most expensive on the ASX, were up more than 2% to $168.52.
“China, in particular, continues to grow in importance with sales to Chinese consumers, both direct and through Australian retailers, estimated to represent 40% of group revenues,” says CEO Christine Holgate.
“Excluding these China sales, we are pleased that both the group and our core Australian business are still in double digit growth.”
Blackmores Australia sales were $238 million, up 73%. Asia direct in-market sales were $61 million, also a 73% increase.
“As well as working closely with our growers and ingredient suppliers, we have invested in additional plant and equipment to increase capacity,” says Holgate.
“Combined with the addition of a third production and distribution shift, this has resulted in record productivity for the group,”
Blackmore has a partnership with Bega Cheese to develop and manufacture a range of nutritional foods.
Last month they launched a range of infant formula, also in high demand in China where consumers want a clean and safe product.
“We continue to invest in new platforms for growth and strategic partners including a long-term joint venture with Kalbe Farma to facilitate entry into the Indonesian market,” says Holgate.
The joint venture is called Kalbe Blackmores Nutrition.
“The strength of the brand and proven demand for our products was reflected in sales growth in all of our markets in Asia,” says Holgate.
Blackmores is now debt free, with positive operating cash flow at $60 million compared to $29 million in the same six months the year before.
“We are pleased with our continued growth and progress on delivering our strategic objectives,” says Holgate.
“Our core business in Australia, New Zealand and the ASEAN region continues to enjoy double digit growth, while our emerging business in China has further propelled our success.
“We have strong, experienced leadership in China and have structured our operations to ensure a sustainable future.”