The Blackmores Limited (ASX: BKL) share price won't be going anywhere on Wednesday.
This morning the health supplements company requested that its shares be placed into a trading halt.
Why are Blackmores' shares in a trading halt?
Blackmores requested a trading halt this morning while it undertakes a capital raising which aims to raise up to $117 million.
According to the release, Blackmores' capital raising comprises a fully underwritten $92 million institutional placement and non-underwritten share purchase plan of up to $25 million.
Blackmores Chief Executive Officer, Alastair Symington, expects the capital raising to support its activities in the Asia market.
He explained: "The Equity Raise will strengthen Blackmores' balance sheet and liquidity position and provide the flexibility to pursue our key strategic priorities. It will enable us to accelerate our growth initiatives in Asia and invest in our efficiency program which will help us to achieve our objective of returning Blackmores to sustainable, profitable growth."
Trading update.
The company also provided the market with an update on how it is performing during the pandemic.
Blackmores advised that it has experienced a material increase in demand for its immunity products. However, as immunity products constitute only a small part of its portfolio, it isn't having a major impact on its performance.
Furthermore, any of the benefits it is experiencing from the surge in demand for immunity products, is being offset elsewhere in the business.
Management notes that there has been a lag in non-immunity products, which has been partly driven by lower shopping traffic.
Also weighing on its performance has been issues gaining access to some overseas sourced materials and capacity constraints at some contract manufacturers. These have prevented the company from being able to fully meet demand in some products.
In light of this, the company expects to deliver underlying net profit after tax of $17 million to $21 million in FY 2020. This is in-line with the guidance it provided with its first half results in February.
