The spectacular sales growth at Blackmores has come to a close

A crowded train in China. Kevin Frayer/Getty Images

The stellar growth at Blackmores, the vitamin company whose products are so loved in China, has ended.

The company today posted a 42% fall in annual profit to $58 million on a 3% slide in sales to $693 million.

Dividends also shrank. Blackmores declared a final dividend of 140 cents a share, bringing the payout for the year to a fully franked 270 cents a share, 34% down on the previous year.

The company says 2017 was a rebalancing year after two “exceptional” years of growth. In 2015 and 2016, shareholders did well as did staff with company-wide bonuses. The company has a program where 10% of profits are redistributed back to staff.

“After a turbulent start to the year, we are pleased with our recent performance,” says outgoing CEO Christine Holgate who is about to become head of Australia Post.

“We finished the year in a stronger position than we entered it. We have changed our expense structure to reflect a different trading environment and maintained investment in core future growth platforms; we have made appropriate provisions to protect us in future years and, with tight management of our inventory and cash, we exited the year with a strong balance sheet.”

Blackmores shares in June slipped below $100. They last traded at $91.17.

Speculation in April last year about potential regulatory changes in China impacted the buying patterns of Chinese entrepreneurs and tourists who were previously purchasing through Australian retailers.

“The decline in sales to Chinese consumers through Australian retail was significant and came without warning,” Holgate says.

To protect against future potential uncertainty, inventory provisions have been increased from $2 million to $14 million.

Although sales recovered as the year progressed, the changed Australian retail environment saw a return to market competition and normal levels of trading, she says.

“The demand for Blackmores products in China remained strong throughout the year although the route to serve it has changed significantly.

“Blackmores responded quickly to the changes in the market by both building a new China export team and strengthening our in-country China business and tightly managing our inventor.”

Direct China sales were up 71% at $132 million in 2017. Including estimated sales through Australian retailers, China accounts for $250 million of sales.

The Blackmores full year numbers:

Source: Blackmores

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