Blackmores’ half year results: Revenue hits five-year high in China, but slumps to five-year low at home
The ASX-listed company said today that its revenue in China achieved AUD$77m (US$61m) in H1 FY2021, up 27 per cent from the same period a year ago.
This was a better performance than its peak in FY2018, where its half year revenue hit AUD$74m. In the subsequent two years, its sales in China fell into the AUD$60m~ region, a reason was due to its difficulty transiting from a daigou-based model to domestic Chinese trade.
Its newfound success in China was underpinned by its cross-border e-commerce (CBEC) growth, with gross merchandise value (GMV) up 31 per cent, outstripping the country’s overall CEBC growth for vitamins and dietary supplements of 26 per cent.
Another key contributor was the Double 11 e-commerce event, the firm said, where it was the third best-selling vitamins and dietary supplement brand on Tmall.
Products wise, its new launches from its “modern parenting” portfolio as well as investments in its nutrition oil products were driving growth.
The “modern parenting” products, ranging from preconception, conception, pregnancy, birth and recovery, breastfeeding, and products for infants and young children, were developed from its newly established Global Innovation Centre opened in Shanghai last year.
Examples include Blackmores’ Pregnancy Brain START DHA+ capsules and Blackmores’ Purely Kids multivitamin.
Overall, the company’s revenue was up 4 per cent to AUD$302.6m (US$239m) in H1 FY2021. Its underlying net profit attributable to shareholders was AUD$19.4m (US$14.7m), up 8 per cent.
Aside from China, South East Asia, in particular Indonesia, and the domestic Australian market has been identified as its three focus markets.
“The strengthening of our balance sheet, ability to pay down debt, and move to a positive net cash position enabled us to step up investments in Asia. This has resulted in accelerated growth in our key markets in Asia in the first half of FY2021.
“Our transformation program and first half result have been achieved despite the disruptions and uncertainty brought on by COVID-19 which affected traditional retail channels and shopper behaviour in Australia,” CEO Alastair Symington said.
Elsewhere, its debut in India is expected to take place late this year.
A slightly lower revenue is expected for the second half of FY2021, the firm said, due to seasonal and key customer events.
Indonesia has become the fastest growing market for Blackmores in South East Asia.
Revenue from the country was up 73 per cent in H1 FY2021 as compared to the same period in FY2020.
The company said this was due to a greater offline distribution, in-store advice, and promotion from product advisors.
Thailand, Malaysia also recorded double-digit revenue growth at 13 per cent and 10 per cent respectively, while Vietnam continued to perform strongly in terms of the infant formula business.
“In South East Asia, our business fundamentals remain very strong and we continue to manage periodic surges of demand linked to COVID-19 outbreaks,” the company said. The demand is largely coming from its immune health supplements.
In contrast, Singapore, Hong Kong, and Korea saw a decrease in revenue due to COVID-19 and travel restrictions. Nonetheless, solid performance in most parts of South East Asia had offset the decline.
As a whole, the company’s international markets (excluding mainland China and ANZ), delivered revenue slightly higher than China at AUD$78m (US$61m). This is also a 19 per cent increase from AUD$68m (US$53m) achieved in H1 FY2020.
ANZ still struggling
ANZ remains as Blackmores’ largest market but has brought in a five-year record low of revenue at AUD$148m (US$117m).
At its peak, revenue from ANZ hit AUD$191m (US$151m) in H1 FY2019.
As compared to the same time last year, revenue from ANZ went down by 10 per cent, due to slowing sales in Blackmores and BioCeuticals products.
“The performance of Blackmores and BioCeuticals was impacted by market contraction, as fewer international travellers and students, as well as rolling lockdowns in Australia led to reduced foot traffic in local retail.
“Important activity usually linked to the cold and flu season was down significantly versus last year, which affected sales of key product lines, in particular, BioCeuticals ArmaForce,” the firm said.
On the other hand, its pet nutrition brand, Pure Animal Wellbeing (PAW) achieved a 53 per cent increase in revenue.
“Blackmores remains focused on achieving long-term sustainable growth in ANZ.
“To drive stronger domestic brand consumption, we are balancing discounting and price promotions with channel-specific brand campaigns that deliver distinctive consumer value propositions.
“Importantly, our relentless commitment to improving value and price mix along with disciplined cost control measures is ensuring this segment continues to underpin the Group profit.”