China sales boost Blackmores' profits, but firm calls time on Bega Cheese infant nutrition JV
New chief executive Richard Henfrey told investors this morning that overall sales for the quarter increased by 9% over the same period last year to $134m.
"We're pleased with our progress compared to the challenging first-quarter performance last year, and we have returned to delivering profit growth," he said.
"We are in a better position than this time last year with a sound balance sheet, sales and profits returning to year-on-year growth, and customers not carrying the high levels of stock that impacted our performance 12 months ago," he said.
He said the firm was still benefiting from Chinese demand, but noted that the market was continuing to evolve.
The company is seeking to increase direct sales in the country after seeing daigou purchases — those made by Chinese shoppers in Australia to sell in China via e-commerce — gradually dwindle over the past year. However, the recent announcement by Chinese authorities that they would not be introducing more stringent e-commerce rules appears to have buoyed the channel once more.
"Consumer demand in China remains strong, though the buying patterns of Chinese entrepreneurs, tourists and exporters in Australia continue to evolve," he said.
Excluding China, sales to Asia were up 12%. Its practitioner-only business, BioCeuticals, saw sales rise by 14%.
Henfrey also announced that the infant nutrition joint venture with Bega Cheese had been scrapped.
The 'Bemore' partnership had been beset with problems, with Bega Cheese boss Barry Irvin stating on Tuesday that the venture was under-performing.
"While this time last year, supermarket shelves were empty and customers in Australia and internationally were providing ever increasing orders, the combination of a regulation change in China, a supply response to the demand signals, and the evolution of supply channels to market now sees significant discounting in the marketplace and signs of short term oversupply," he said.
"This change in market circumstances has seen our expected sales not materialise at levels that were initially forecast."
Henfrey said Blackmores remained committed to the infant nutrition category and predicted that full-year 2018 profits would top 2017’s.
