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Blackmores – an incredible ride


Blackmores – an incredible ride

When Marcus Blackmore oversaw the float of his family’s business 35 years ago at $1.00 per share, little did he (or anyone) realise that total dividends since 1985 would have aggregated to $27.65 per share.

Today, Blackmores (ASX:BLK) has a market capitalisation of $1.36 billion, and the share price at $77.90 is down 63 per cent from its peak four years ago of $218. The financial data over the four years to June 2020, tabled below, gives readers insight into this deterioration.

Over the four years to June 2020, Net Profit is forecast to decline 82 per cent from $100 million to an estimated $18 million; Dividends per share are forecast to decline from $4.10 to nil; Return on Equity is forecast to decline from 64.3 per cent to 8.8 per cent and Net Debt to Equity is forecast to increase from 10.1 per cent to 63.7 per cent.

Today, Blackmores is suffering its biggest challenge for many years as it continues to lose market share in China.  Blackmores gets little transparency in the demand profile and the supply chain associated with the Daigous route to market. While this was a major contributor in the hockey stick boost for Blackmores in the handful of years to Fiscal 2016, the situation seems likely to come to a head in the June 2020 half-year.


Year to 30 June 2016 (Actual) 2018 (Actual) 2020 (Forecast)
Revenue ($m) 600 602 602
Net Profit ($m) 100 70 18
EPS (17.4m shares) $5.75 $4.02 $1.03
PE at $77.90 13.5X 19.4X 75.6X
DPS $4.10 $3.05
ROE (%) 64.3 37.8 8.8
Net Debt/ Equity (%) 10.1 25.6 63.7

The recent release of Blackmore’s interim report for the six months to 31 December 2019 revealed Net Profit of $18 million, a decline of 47 per cent from $34 million in the previous corresponding period, on Revenue of $303 million down 5.5 per cent from $320 million in the previous corresponding period.

The forecast Net Profit for the year to June 2020 of $17 million to $21 million (say $18 million) implies nil net earnings in the June 2020 half-year.

Many commentators had previously expected a Net Profit of $26 million for the June 2020 half-year.  At the Earnings before Interest and Tax line (EBIT), the $32 million reduction is expected to comprise Cost of Goods Sold ($13 million), new labels ($7 million), less discounting ($8 million), the coronavirus ($7 million) less asset sales ($3 million).

Recently appointed CEO Alistair Symington and CFO Gunther Burghardt must be considering some sort of Chinese trade partnership. Given the current share price, the uncertainty associated with Blackmores operating environment and the relative performance with its major competitor, Swisse, we will allow this one to pass through to the ‘keeper.


Chief Executive Officer of Montgomery Investment Management, David has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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  1. Blackmores, has done the damages to itself.
    Blackmores by 2017 December was riding high with a lot of customers promoting their products in China. Little Blackmores realised that it was the work of Daigou’s and wholesalers made its brand successful. Blackmores went and destroyed one of their biggest customer and promoter of their products thus ended up in destroying their China business.
    Currently Blackmores does not know who are their customers are and where to sell their products. Still in the dark. We can expect a long way before any sign of recovery.

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