Blackmores share price dives despite 38% dividend boost

Blackmores will pay a fully franked interim dividend of 87 cents per share.

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Key points

  • The Blackmores share price tumbled 9% in early trading after the supplements company released its 1H FY23 results
  • The company revealed a 17% profit boost and a 38% higher dividend 
  • Blackmores shares are outperforming the All Ords in 2023 

The Blackmores Ltd (ASX: BKL) share price tumbled 9% in early trading today after the supplements company released its 1H FY23 results.

Despite a 17% profit boost and a 38% higher dividend, investors appear to be displeased with the report.

The Blackmores share price opened at $83.50, down 1.4% on yesterday's close. The stock fell quickly to an intraday low of $77.05, down 9%. The shares are currently changing hands for $79.94, down 5.7%.

Let's take a look at what the company reported.

Blackmores share price dives 9% despite profit boost

Blackmores said the company had achieved a "solid first half result compared to [a] very strong prior corresponding period which included COVID-19 surge primarily in the International segment".

Here are the highlights of 1H FY23 for Blackmores:

  • Revenue of $338 million, down 1.6% on the prior corresponding period (pcp) of 1H FY22
  • Underlying gross margin declined from 53.9% to 53.3%, largely due to the impact of inflation
  • Underlying net profit after tax (NPAT) of $24.4 million, up 17.3%
  • Net sales down 1.6% and earnings before interest and taxes (EBIT) down 5.5%. If the impact of COVID-19 in 1H FY22 is excluded, net sales are up 3% and EBIT is up 28.4%
  • Underlying earnings per share (EPS) up 17% pcp to 125.4 cents
  • Fully franked interim dividend of 87 cents per share, up 38% pcp and payable on 28 March

Blackmores dividend up 38%

The company said its balance sheet remains strong and this has enabled it to increase its payout ratio.

It has increased the payout range from 30% to 60% of statutory NPAT to 40% to 70%.

Statutory NPAT during 1H FY23 was $24.3 million, up 19.6% pcp.

What did management say?

CEO Alastair Symington said:

Blackmores delivered a solid result with continued revenue and earnings growth momentum in its Australia/New Zealand and China segments offset by its International segment which lapped a very strong prior corresponding period (pcp) that primarily included COVID-19 demand surge for immunity products.

Our teams have continued their disciplined focus on execution with improved customer service levels
and continued new product and brand innovation which drove market share and distribution gains across our core geographies.

What's next?

Symington said the near-term remained "somewhat uncertain" due to the impact of rising inflation and interest rates on consumer spending.

He said:

… we remain focused on executing our strategic and commercial plans and leveraging the Group's channel and geographic diversity.

Operational expenditure reduced by 6.3% while we remain on track to achieve our target of $55 million
annualised gross cost savings by the end of FY23 with $6 million in savings delivered during the first

Today we have also outlined the next phase of cost savings targeting an initial $34-44 million in further
gross cost savings over FY24 – FY26.

Blackmores share price snapshot

The Blackmores share price is up 9.75% in the year to date compared to a 5.1% bump for the S&P/ASX All Ordinaries Index (ASX: XAO).

Over the past 12 months, Blackmores shares have fallen 13.3% compared to a rise of 0.3% for the All Ords Index.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Blackmores. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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