Blackmores' profits slump again with hopes now pinned on new Vietnam and China strategies

Blackmores' latest numbers show sales of $496m for the first nine months, down 6.7.

Blackmores is continuing to suffer from a slump in Australian sales to ‘daigou’ buyers, with overall net profits dropping by 42.8% year-on-year, according to figures for the first nine months of its financial year.

Daigou shoppers were largely responsible for considerable sales rises in recent years, by buying products in Australia to sell on in China. But uncertainty over cross border e-commerce rules has softened the market, hitting companies like Blackmores hard.

Its latest numbers show sales of $496m for the first nine months, down 6.7% compared to the previous corresponding period. Net profit after tax of $43 million was down 42.8%.

In February we reported how profits slumped by 41% in the first of half of the financial year.

Blackmores Australia and New Zealand achieved sales of $264m for the nine months, down 26% compared to the previous corresponding period.

CEO Christine Holgate said Blackmores Australia sales had steadily grown over each quarter of the year, but that “this has still not been enough to make up for the decline in sales through Australian retailers to entrepreneurs selling to consumers in China that so heavily influenced the Australian market in the prior year.”

The company is now trying to boost China sales within the country and via direct export channels.

“Chinese consumers are now purchasing through multiple channels and our China in-country and export sales increased to $92m in the nine months, up 60% from the prior year," said Holgate.

“China remains an important part of our business and we were extremely honoured to meet with China’s Premier Li Keqiang in March to share our support of his Healthy China 2030 vision,” she added.

Blackmores also welcomed last month's news from China’s Ministry of Commerce which reinforced its commitment to China’s free trade zones and to supporting cross border e-commerce. Blackmores Greater Asia region, excluding China, generated sales of $62m, in line with last year.

Vietnam expansion

Excluding Korea, which is in the process of completing a transition to a new distribution model, core markets in Asia were up 14%.

“Blackmores’ emerging business in Indonesia has progressed well. Blackmores signed a distribution agreement with the Mesa Group, Vietnam’s leading distribution company with a network of 150,000 retail stores. Blackmores and Mesa will launch a range of 13 Blackmores products in the coming months,” added Holgate.

“Vietnam is a market we are excited about, with enviable economic growth, a growing investment in the region and double digit growth in the vitamin and dietary supplement category and we are proud to have a distribution partner with such expertise. Our launch in Vietnam consolidates our presence in the ASEAN region and we hope that through our high quality products and leading education programs we can make a positive contribution to health in the Vietnamese community.”

Despite the latest figures, the company maintained that the overall sales trend was encouraging.

“We are focused on simplifying and streamlining our business, conservatively managing expenses and investing in our brand, facilities and new markets to diversify our revenues and underpin growth,” added Holgate.

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