Last week the company revealed it had raised AUD92m (US$62m) from its institutional shareholders “with overwhelming support”.
This week retail investors can take part in a AUD$25m (US$16m) Share Purchase Plan. Around 40% of the funding will be used to drive the firm’s expansion in Asia, after a troubled year for the firm.
Back in February it revealed it was on course for after-tax net profit for the full financial year ending June of A$17m to A$21m (US$11.4m to $14.1m). This is half of what was expected and considerably below last year’s profit of A$53m.
Speaking at the time, CEO Alastair Symington told shareholders: “The Board understands and acknowledges that shareholders will be bitterly disappointed with the financial performance of the business. The Board acknowledges that these results are completely unsatisfactory and we have much work to do to restore confidence in Blackmores.”
Symington cited several factors for the slump, including the impact of the coronavirus, which hit supply chains into China.
The former Coty exec has overhauled the leadership team since taking the helm in late 2019, with Gunther Burghardt appointed Chief Financial Officer, Ayumi Uyeda joining as Managing Director for Australia and New Zealand, Kitty Liu as Managing Director for China and Dean Garvey, Managing Director, International.
Last week he said that proceeds of the equity raised would be used to fund the firm’s expansion in Asia, as well as strengthen the balance sheet.
These include plans for a 'Modern Parenting’ innovation centre for product development in China, additional investments in IT and in-store product advisers in Indonesia, advances in digital capability across Asia, and working capital for its venture into India.
China has long been a major target for the firm, but its last full-year financials published in August 2019 showed that key exports accounts and in-country sales were down by 15% yoy to $122m.
This was attributed to stricter e-commerce laws introduced in the country, a channel heavily relied on by many Western brands. Blackmores has been striving to increase its presence in the ‘general trade’ domestic market for several years, but China’s tough and lengthy product registration system is a major obstacle.
In Indonesia, Blackmores says its joint venture with Kalbe “is well ahead of the business case with high growth and strong margins”.
It sees significant potential for long-term economic growth with the vitamin and dietary supplements sector forecast to grow by 9.6% over the next three years.
India will also become a key target for the firm, with Symington telling us shortly after his appointment that a market-scoping exercise was underway.
In its domestic market, where Blackmores and its practitioner-only brand BioCeuticals have a 20.7% market share, the company says it will pursue “a right pack, in the right channel, at the right price” strategy, stressing that success at home is crucial to its overseas expansion ambitions.
It will also invest in a new high speed tablet line and ‘rationalise’ its product range.
Symington said last week’s backing from institutional investors put the firm in a “position of strength to focus on our strategic priorities and help us achieve our objective of returning Blackmores to sustainable, profitable growth.”
However, major shareholder and company chairman Marcus Blackmore said he was not taking part in the funding drive.
He told the Australian press that he supported the move, but that he had several major projects, including a new house and yacht, to fund this year.