Blackmores 66% profits plunge: Firm refocuses to boost hires in Asia amid 10% jobs cut in ANZ
In its FY2020 announcement, the company said total global net sales was down 3% yoy to AUD$568m (US$407m).
Net-profit-after-tax (NPAT) nosedived 66.1% yoy to AUD$18.1m (US$12.9m).
Sales revenue from China fell 16% yoy to AUD$103m (US$73m), while that of Australia and New Zealand dropped 14.8% to AUD$227m (US$162m).
The ongoing COVID-19 pandemic, reduced exports and fewer sales to Chinese tourists in Australia were cited as factors for sales revenue decline.
The biggest consolation came from the international markets, where sales revenue was up 30% yoy to AUD$139m (US$99.6m), with the emerging middle-class as a key factor.
Its international markets mainly consist of the South East Asian countries, with Indonesia delivering the greatest growth at 36% yoy increase in sales.
Speaking to NutraIngredients-Asia, CEO Alastair Symington said that the company’s top priority was to build up local markets that exhibited growth opportunities, and this would involve an organisational redesign.
Citing China as an example, the company opened an innovation centre in Shanghai in June.
The team, which has about 15 members and is expected to further expand, will focus on developing products catered for the ‘modern career women’.
Symington said the first line of products, to be launched in September, would involve supplements for conception, pregnancy, breastfeeding, as well as children. The next wave of product launch would come in the start of 2021.
Building on its strong presence in Tmall, the company also intends to strengthen its e-commerce presence in Kaola and JD.com.
With all the investments pumped, the target for China was to grow at a rate faster than that of cross-border e-commerce in the country – which currently stands at about 10%.
Another growth opportunity is in developing products for specific cultural groups, such as halal-certified products in places with large Muslim population.
“That's the opportunity for us, it is to better serve consumers through local market insights and knowledge.
“We believe if we can build a consumer experience either online or in-stores that is superior to competition, then we will have a better chance, we will be successful,” he said.
An opportunity and a challenge
While building local expertise in China and South East Asia is crucial for further growth, it also presented huge challenges for the company.
Symington explained that the company would need to quickly manoeuvre its resources into key strategic growth areas, and this would be its biggest challenge.
“The biggest challenge for us right now is to move resources into places as quickly as we can to capitalise on what we see as the big growth opportunities moving forward.
“So that part of the organisational redesign, is to make sure that we can do that as quickly with the least impact,” he said, adding uncertainties from COVID-19 as the other big challenge.
This would involve shifting some role, such as sales and marketing, from Australia into China and South East Asia.
As such, the company started consultation with employees in Australia and New Zealand last week. The consultation will be completed next month.
The company, which has about 1,400 employees, also said that the organisational redesign would require a simplification of its workforce in ANZ, which will lead to some job losses.
“As we are in a consultation period, we cannot give definitive numbers but anticipate a reduction of approximately 10% of the workforce. Our priority is to maximise redeployment and provide care and support to all impacted individuals,” the company said.
Remuneration adjustment
In light of the COVID-19 pandemic, all ANZ-based employees (except for those involved in the ‘Make, Pack, Check, and Deliver’ task), including the board and the executive team, had a 20% reduction in hours and renumeration from May 1.
Full pay was reintroduced from June 15 as the company became eligible for fiscal support from the Australian and Singaporean government.
Asked if the senior team would take further pay cuts due to COVID-19, Symington said that the senior executives have been taking a pay reduction for four months since April.
“We haven’t mentioned, back in April, we all took a pay reduction, it is part of our remuneration programme that is around the incentives and bonuses,” he said.
According to the report to shareholders, Symington’s annual pay for FY2020 was AUD$1.34m (US$960,000), a 68% increase of that of previous CEO Richard Henfrey’, whose package for 2019 would have amounted to AUD$794,000 (US$570,000).
Waiting for India to stabilise
The company registered a business entity in India about eight weeks ago, but with COVID-19 worsening in the country, it said it would need to wait for the market to stabilise before making a full-scale launch.
“India is still in a difficult circumstance due to COVID-19. We are waiting for the market to stabilise and the pandemic to be under control before a full-scale launch,” Symington said.
Nonetheless, he still hopes for a market test drive by the end of this year.
Tailored vitamins
A line of tailored vitamin under the brand ‘B(More)’ will be launched in Australia in the second half of this year.
The company said this was part of its new digital shopping strategy where tailored vitamins would be delivered to the consumers’ house.
In terms of the best-sellers, while immune-support supplements were in high demand during COVID-19, that of nutritional oils, joint, bone, and arthritis had dropped.
