Sales at Blackmores are down in the first half of the financial year but mainland China is still buying more of its vitamins than ever before.
The company, one of three $100 plus shares listed on the ASX, today reported sales of $322 million for the six months to December, down 6%. And net profit after tax dropped 42% to $28 million.
In early trade, Blackmores shares were down more than 7% to $107.75.
Direct sales to China jumped 92% to almost $64 million.
“The Chinese market is both complex and challenging, though it remains a very important part of our business and we are pleased with our growth,” says CEO Christine Holgate.
However, sales in Australia fell 31% to $158 million. Chinese-influenced sales through Australian retailers were down as buying patterns change.
“Sales and profit improved in the second quarter compared to the first quarter,” says Holgate.
“The first quarter was impacted by changes to the buying patterns of Chinese exporters and by high stock levels held by Australian retailers.
“We are encouraged by progress in the second quarter across the Group, though the Australian retail environment remains challenging.”
Other Asia sales, excluding Korea, delivered almost $40 million, up 16%.
She says the infant nutrition range developed with Bega Cheese is growing steadily.
However, its progress has been impacted by regulatory changes and volatile market conditions.
“As a result we continue to review this business to ensure we have the right structure in place for the future,” she says.
The first half financial results include a $2 million inventory provision on the infant nutrition range.
Bellamy’s, a maker of organic infant formula, has also reported a speed bump in sales from regulatory changes in China. a2 Milk, however, is reporting increasing sales of its formula and milk in China.
Holgate says the full year result isn’t expected to match the exceptional 2016 financial year result, although it will represent good growth on the 2015 profit.
The company declared an interim fully franked dividend of 130 cents a share, a fall of 35% compared to the same six months the year before.