Earnings preview: Blackmores Limited

On Thursday Blackmores Limited (ASX: BKL) will take centre stage when it releases its half-year results to the market.

Expectations have been rising fast ever since the health supplements company released its first-quarter results in October of last year.

That release revealed a 9% increase in first-quarter net sales to $134 million and a 28% increase in quarterly net profit after tax to $15.4 million. A key driver of this growth was its sales into China, with direct China sales up 28% on the prior corresponding period.

All in all, this left Blackmores in a position to “deliver growth on last year’s reported profit” according to management.

While that outlook was a little on the vague side, one broker has more clear expectations for the first-half and full-year results.

According to a note out of Goldman Sachs, its analysts expect Blackmores to deliver sales of $377.4 million and earnings before interest and tax of $57 million for the first-half. This will be growth of 13% and 30% on the prior corresponding period.

Earnings per share is expected to come in at 223.2 cents, with an interim dividend of 160 cents per share declared.

The broker has pointed to strong sales growth data from the Tmall/Taobao platform as being a driver of this acceleration in sales growth. Goldman has advised that the data reveals a 59% lift in sales through the platform during the six months compared to the prior corresponding period.

What about the second-half?

Goldman doesn’t expect sales growth to accelerate in the second-half and estimates growth of 6% on the second-half of FY 2017. All in all, this is expected to lift full-year sales to $771.7 million, up 11% year-on-year.

But thanks to greater stability in market pricing, a reduction in rebates, and the benefit of supply chain initiatives potentially beginning to flow through, Goldman thinks Blackmores will see a meaningful lift in its gross margin in the second-half.

Ultimately this is expected to lead to full-year EBIT growth accelerating 40% year-on-year to $120.6 million and full-year earnings per share of 473.1 cents, up 39% year-on-year.

Should you invest?

Goldman may only have a neutral rating and $173.20 price target on Blackmores’ shares, but I think it is a buy alongside industry peers Bellamy’s Australia Ltd (ASX: BAL) and A2 Milk Company Ltd (ASX: A2M).

Although, having said that, with all three companies reporting their earnings this week, I think investors may want to consider waiting for their respective results releases before hitting the buy button.

In the meantime, these high-flying blue chip shares could be ready to be bought today if you don't already own them.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!