Blackmores shares have cooled from a January high of $220, and yesterday fell 4.81 per cent to close at $157.07.
DEMAND from China helped boost Blackmores to yet another record profit result, delivering staff a bonus month of pay and shareholders a bumper dividend.
Any crackdown on unlicensed sales in China would not dent Blackmore’s booming sales, even though a substantial proportion of vitamins sold in Australia end up being onsold into Asia in this way.
Blackmore’s chief executive Christine Holgate said sales to Chinese consumers in the first half accounted for approximately 40 per cent of the group’s $341 million in revenue.
Blackmores CEO Christine Holgate.Source:News Corp Australia
That’s up 65.5 per cent from the six months to 2014. Yet sales to Asia directly were just $60.9 million, which means potentially a third of the $238 million in Australian sales made its way to Asia via the ‘grey market’.
“We don’t see any falling in those sales, we still see strong trajectory and we are continuing to build our presence in the Chinese market,” Mr Holgate told Business Daily yesterday.
“Most people who are selling goods into China today from Australia are doing purely so through the grey market, which we believe is taking place in our Australian figures,” Ms Holgate said.
The Chinese Government is understood to be considering tightening up its regulatory hurdles to prevent ‘grey market’ sales, a move Ms Holgate supports.
“We welcome the ones (regulatory changes) that we believe are being put forward because we have an ability to serve the market directly inside China,” she said.
In the six months to December 31, net profit after tax increased to $48 million, up 165 per cent from the prior corresponding half.
Ms Holgate says the Chinese vitamin market is worth $US20 billion per year, so the potential to grow sales remains.
In October the company announced a partnership with Bega Cheese to produce a range of nutritional foods, including infant formula through Bega’s subsidiary Tatura.
The infant formula was launched on January 15, with 100,000 tins being produced in the initial batch.
Ms Holgate declined to provide sales numbers so far, but said early indicators were pleasing.
“It is very early days but we are very encouraged … we have been quietly pleased with the response from Australian mum’s particularly,” she said.
Ms Holgate says the biggest issue the company faced during the half was sourcing the raw materials to keep up with demand.
“The biggest challenge continues to be access to raw materials to maintain supply to the Australian mum,” she said.
The company will pay a fully franked dividend of $2, up from 68 cents a year earlier. Blackmores shares have cooled from a January high of $220, and yesterday fell 4.81 per cent to close at $157.07.
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