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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.

Blackmores (ASX: BKL) share price drops on FY19 results Source: Bloomberg

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.

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