Blackmores shares have hit an 18-month low after the vitamin maker warned its sales in China were not expected to grow within the next six months.
The company’s net profit was up 0.4 per cent to $34.3 million for the six months to December 31, with total revenue increasing 11 per cent to $319.3 million.
But the health supplements manufacturer said its “reported China segment sales were down 11 per cent in the half compared to the prior corresponding period,” and Blackmores was reviewing its investment approach in the country.
“China sales in the third quarter are being impacted by continuing changes to the way consumers purchase our products as well as higher inventory in the trade and a general softening of consumer sentiment,” Blackmores said in a statement.
“As a result, we do not expect the second half profit performance to be ahead of the first half result.”
Many Chinese shoppers were still buying Blackmores products, the company suggested, but the goods were being purchased in Australian stores and not in China.
Revenue from sales within Australia and New Zealand increased 19 per cent to $144 million compared to the previous corresponding period.
Blackmores said its bottom line improved after it bought weight-loss brand Impromy from pharmaceuticals firm Probiotec last year, with the acquisition providing an “immediate positive impact on profit”.
Blackmores said its outlook was for modest full-year revenue growth overall.
The company also announced a cost-cutting effort in a bid to find $60 million in savings over the next three years.
“The intention is that savings will be redirected to investment in strategic initiatives, investment in people and capacity, and delivery of overall margin improvement,” it said.
The company has declared a fully franked interim dividend of $1.50 per share, unchanged from a year ago.
At 1230 AEDT on Tuesday its shares were down 22.94 per cent to $95.21, its lowest level since August 2017.
BLACKMORES H1 PROFIT
* Half-year net profit up 0.4 pct to $34.3m
* Revenue up 11.1 pct to $319.3m
* Interim dividend $1.50 per share, fully franked, unchanged.