Blackmores shares slide 14% on 2019 full-year results
As recession fears hit equity markets, Blackmores proved to be one of the worst hit on the ASX – as its share price finished the day significantly lower.
The Blackmores Ltd (ASX: BKL) share price fell as much as 14% today, as the company joined in on the global selloff that saw investors retreat from equities.
Speaking to the severity of this volatility, as of 16:09 AEST, the ASX 200 had shed a massive 190 points.
Indeed, if recession fears played a hand in the broader market decline, Blackmores’s FY19 results that saw revenue up just 1% and profits (NPAT) down 23.6%, didn’t help matters for the supplements producer.
Even with all this considered, here are the key things we learnt from Blackmores’s full-year results today.
Blackmore share price: front-line financials
It’s impossible to tell how Blackmores Ltd’s share price would have fared if the broader market hadn’t faced such widespread volatility today.
Even so, in terms of top-line growth, Blackmores saw its revenue rise just 1.4% in FY19 – to A$609 million.
From an earnings perspective, Blackmores reported full-year earnings (NPAT) of A$53 million, down some 24% from the year prior.
When excluding a number of non-recurring costs, these results are slightly improved, with earnings coming in at A$55 million.
Ultimately, these disappointing FY19 results cap-off a difficult period for the supplements company. Its share price has – after skyrocketing in 2014 and 2015 – pulled back significantly since then.
Blackmores (ASX: BKL) currently trades at A$72.19 per share, some 43% lower than it did a year ago.
Asian growth remains
Though Blackmores’s top-line results were flat and its bottom-line growth significantly lower, the company still reported robust growth in the Asian market – excluding China.
For example, in FY19, sales in Vietnam rose 157%, Korean sales increased 28% and in Indonesia sales almost doubled, gaining 90%.
In a good sign for future growth and speaking of expansion plans, the company additionally commented that:
‘We are focused on continuing to diversify into new markets with new products. The business is continuing it evaluation of market entry into India.’
A lower dividend
Though growth opportunities have continued to materialise, Blackmores’s full-year, fully-franked 2019 dividend came in at 202 cents, compared to 305 cents in 2018 – down some 27% from the year prior.
No commentary was made on whether Blackmores Ltd would seek to increase its dividend in the near-term.
The China growth story in focus
China proved to be a sticking point for the company in 2019, as revised e-commerce laws – that took effect in January of this year – dragged on Blackmores’s FY19 sales.
On this front, China sales came in at A$122 million – still a sizable percentage of the company’s revenue – but down 15% on a year-over-year basis.
Problematically, these challenging conditions are expected to continue to put pressure on Blackmores’s bottom-line in the first-half of FY20.
Of these obstacles, the company commented that:
'The impact of changes to China's e-commerce laws and costs associated with restructuring and the Braeside acquisition are expected to result in profit for the first-half being below the prior corresponding period.’
In saying that, it’s not all negative. Blackmores is predicting that the company is set to benefit from increased operational efficiencies in the second half of the 2020 fiscal year. Though the specifics and/or proportions of these benefits remain unclear.
Blackmores's final 2019 dividend is set to be paid on September 12, 2019.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get commission from just 0.08% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets