Blackmores (ASX:BKL) share price charges higher after profit growth returns

The Blackmores Limited (ASX:BKL) share price is charging higher today after returning to profit growth. Here's what happened…

| More on:
blackmores share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Blackmores Limited (ASX: BKL) share price is charging higher following the release of its half year results.

At the time of writing, the health supplements company's shares are up 4% to $77.17.

How did Blackmores fare in the first half?

For the six months ended 31 December, Blackmores reported revenue of $302.6 million. This represents a 3% increase on the prior corresponding period or 4% in constant currency.

This was driven by a 13% increase in International revenue and a 25% lift in China revenue, which offset a 10% decline in ANZ revenue to $148 million.

During the half, Blackmores received $10.4 million in government assistance through the JobKeeper program. However, since the end of the period, it has decided that it received more than necessary. As such, it will return $2.4 million of pre-tax Australian JobKeeper funds during the second half.

In respect to its earnings, Blackmores reported an 8% increase in underlying net profit after tax to $19.4 million.

This improved profitability has allowed the Blackmores Board to reinstate its dividend after a one-year hiatus. It has declared a fully franked interim dividend of 29 cents per share.

Management commentary

Blackmores' Chief Executive Officer, Alastair Symington, appeared to be pleased with the half.

He said: "This time last year we outlined our three-year strategy to set us on the path for sustainable, profitable growth. Since then, we have taken the necessary steps to hit important turnaround milestones and made positive strides toward simplifying our operating model in line with our new strategic direction."

"The strengthening of our balance sheet, ability to pay down debt and move to a positive net cash position enabled us to step up investments in Asia. This has resulted in accelerated growth in our key markets in Asia in the first half of FY21."

Mr Symington was particularly pleased given the tough trading conditions it was facing due to COVID-19. He remains confident there will be more of the same in the second half.

He explained: "Our transformation program and first half result have been achieved despite the disruptions and uncertainty brought on by COVID-19 which affected traditional retail channels and shopper behaviour in Australia."

"We remain focused in the second half on continuing to deliver against our strategic priorities. I am confident we will delight our consumers by giving a more distinctive brand experience with Blackmores, BioCeuticals and PAW by Blackmores while maintaining cost discipline and operational excellence to support future growth and shareholder value creation," he added.

Outlook

While no real guidance has been provided for the second half, management has warned investors that it could be a tough period.

Although it expects growth in the Asia market, the core ANZ market remains challenging. It explained:

"As we look to the second half, revenue growth in Asia will continue with positive signs of health and economic recovery underway. The Australian vitamin and supplement market will continue to face structural challenges as international borders remain closed and the focus on vaccine rollout will disrupt consumer behaviour for at least the rest of the 2021 calendar year."

"Despite a full half of realisation from our 1 October price increases, revenue for the second half will be slightly lower than the first half which was impacted by seasonal and key customer events."

"In the second half, we will maintain our focus on cost management. For the remainder of the year we will respond to changing retail demands and restore much needed brand investments to levels before the onset of the pandemic. Blackmores remains mindful of the ongoing uncertainty around COVID-19."

Following today's gain, the Blackmores share price is up 10.5% over the last 12 months.

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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »