The Motley Fool

Should you add Blackmores to your portfolio?

In tough economic times, even iconic Australian brands will struggle to grow.

Despite a challenging environment, Australian health product developer Blackmores (ASX: BKL) is pleased with its latest results despite profit being less than therapeutic for investors. Sales for the nine months ended March 2013, were $241 million, up 29% compared to the previous corresponding period, but the company cited tough economic conditions as the catalyst for profit being down 7%.

The company has seen large amounts of growth in Asian, New Zealand and Australian markets but it was the tough economic times which affected suppliers’ orders of health-related products. Chief Executive Officer Christine Holgate said “undoubtedly the Australian retail sector is in a challenging period and our third-quarter results were impacted by larger retail accounts reducing stock levels”.

Locally, products are sold on the shelves of retail stores, chemists and supermarket giants. Coles, owned by Wesfarmers Limited (ASX: WES), and Woolworths Limited (ASX: WOW) are also providers of Blackmore’s products, but the group has said that profit was pushed down because of pressure by heavy price promotions and higher than normal stock write-offs due to structural changes. No doubt the fierce rivalry in the Australian supermarket industry will take many companies down with it.

Looking ahead, nothing major has changed within the company and it still is a solid stock for a portfolio although in tough economic conditions it is unlikely to make a massive move anytime soon. However, in foreign markets, the Asia division achieved a record sales quarter, up 25%, with year-to-date sales up 15% which the company attributes to its Thailand and Malaysia markets specifically.

Foolish takeaway

Blackmores is a ‘fair dinkum’ Australian company with over 80 years’ experience giving health conscious people access to herbal, mineral, nutritional and vitamin rich supplements. Although, it fell over 5% Thursday, the fully franked dividend with a yield of 4.2%, excellent stable historical results year-in-year-out and strong long-term growth prospects make it an enticing addition to long-term investing portfolios.

Learn about two more of the ASX’s most promising small cap companies in our brand-new free investment report, “2 Small-Cap Superstars”. Click here now, your copy is FREE!

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.