Shares in vitamin maker Blackmores fell 7% at one stage yesterday after the company reported a 14.3% fall in net profit for the first nine months of 2018-19, a not unexpected outcome given the weak half-year performance, early departure of the CEO and continuing problems with softening demand from its largest market, China.
A week after surprising the market with news of a weak performance in its key Chinese markets and a loss in earnings momentum, Blackmores provided a second shock yesterday with news that its newish CEO had quit after just 18 months in the gig.
Reports suggest Australia's flu season is extensive and well ahead of any of the previous five years at this early stage. Morgan Stanley believes this will translate into strong support for sales in the fourth quarter of FY19 and first quarter of FY20.
March quarter results were weaker than Morgans expected, with net profit down -47%. Fewer trading days, more normalised trade spending and increased marketing and investment were evident to the broker.
First quarter was weaker than Morgans expected, because of a slowdown in the Australian wholesale market caused by retailers de-stocking and some exporters changing the channels through which they acquire product.
Blackmores has briefed investors that it expects growth in the Chinese consumer health market to continue and Morgans observes the March quarter results demonstrate this strong growth from an increasingly affluent Chinese middle class.