Australia's Blackmores warns of smaller H1 profit on China; shares tumble
By Shriya Ramakrishnan
Aug 15 (Reuters) - Australian vitamin maker Blackmores Ltd reported a weaker-than-expected annual profit on Thursday and warned first-half profit would decline due to tougher trading conditions in China, sending its shares down 12% to four-year lows.
Blackmores, once an investors' darling as China's appetite for its health products drove double-digit annual sales growth, is now battling with tougher import rules and a slowdown in consumer spending in its biggest overseas market.
"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."
Blackmores' overall sales to China, which includes direct exports and in-country sales, fell 15% in the year, prompting a bigger-than-expected 23.6% drop in full-year profit.
"I think there is more downside from here," said James McGlew, executive director of corporate stockbroking at Argonaut said.
"This is a stock that people will always buy for its growth prospects and once that growth stops ... the ability to sustain your share price will fall on maintaining your dividend, and that has gone as well."
The 87-year-old firm declared a final dividend of 70 Australian cents per share, down from 155 cents last year.
Net profit fell to A$53.5 million ($36.1 million) in the year ended June 30, below the A$59.9 million average forecast by nine analysts, according to IBES data from Refinitiv.
Blackmores shares fell to their lowest level since July 2015 following the result.
Last month, Blackmores hired Alastair Symington as its chief executive after a four-month search, hoping his experience in China would help revive sales growth in the country. Symington will join the company on Oct. 1.
Blackmores added that it would undertake a A$60 million savings programme over three years.
The A$43.2 million acquisition of its Braeside facility, announced last year and set to complete later this year, would eat into profits in the next half, it said.
($1 = 1.4813 Australian dollars)