The profits of vitamin maker Blackmores have been hit by weaker sales in Australia as fewer people who’ve been buying locally export to China.
The company reported 46.6% fall in net profit after tax to $12 million for the September quarter. Sales fell over the three months by 8.1% to $149 million.
Blackmores shares fell below $100. A short time ago, there were at $98.90, down 5.2%.
CEO Christine Holgate says lower Australian sales impacted the result.
“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,” she says.
The China business, including in-country sales and sales from Blackmores’ new export division, delivered $31 million, up 220% compared to the same three months last year.
“The rapid growth of sales through these channels is encouraging as it validates continuing demand for our products in China,” says Holgate.
Blackmores Australia sales were down 40% to $68 million as Chinese exporters transitioned to new channels and Australian retailers worked through excess stock.
“We estimate the impact of reducing excess stock to be $17 million with a further $28 million resulting from changes to the way exporters buy through Australian retailers,” she says.
About 20% of Australian sales in the first quarter are estimated to be to consumers in China.
Holgate says she doesn’t expect the company to match last year’s performance.
“We are pleased with the improving trends and are encouraged by new growth opportunities,” she says.
“At this stage, we anticipate a stronger second quarter compared to the first quarter sales and profit.”
In 2016, Blackmores recorded a 52% rise in sales to $717 million and a record net profit after tax of $100 million, up 115%.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.