China’s regulatory rumours hit Blackmores

Blackmores Vitamins4Vitamin maker Blackmores’ full-year profit has tumbled as regulatory rumours dampened demand from Chinese consumers in Australia.

Blackmores CEO Richard Henfrey said talk of potential changes to China’s e-commerce regulations and “the suitcase trade” had impacted the buying patterns of Chinese entrepreneurs and tourists who were previously purchasing products in Australian stores and bringing them back home.

The reduction was significant and came without warning, the company said, particularly in the first quarter, and dragged full-year profit for 2016/17, down 41 per cent to $59 million. It compares to 2015/2016 when the company posted a record profit of $100 million and estimated that more than $200 million of its total $717 million revenue came from Chinese consumers as visitors taking products home.

Henfrey, who replaced Australia Post-bound Christine Holgate less than two weeks ago, said while those regulatory changes never came about, rumours about them created a great deal of uncertainty in the market.

“Those Australian-Chinese consumers stopped buying at that point of time and we have worked pretty hard to recover from that,” Henfrey told AAP on Tuesday.

Full-year revenue from ordinary activities fell three per cent to $692.8 million, with the bulk of sales coming from the Australian and New Zealand arm despite a 23 per cent drop compared to a year ago.

Excluding the impact of Chinese influenced sales, branded domestic sales were in line with the prior year. Asia direct sales rose 36 per cent to $216 million, amid growing demand for products in China where direct sales grew 71 per cent to $132 million.

Blackmores’ BioCeuticals Group, which includes the BioCeuticals and Global Therapeutics brands, also grew with sales of $102 million. The vitamin maker said it had increased its inventory provisions from $2 million to $14 million to protect against possible future uncertainty, which had impacted earnings by around $10 million for the full year.

It said it expects regulation, pricing and evolving market conditions to continue to provide challenges in the year ahead but, notwithstanding these challenges, believes its Asia division, particularly China, will strengthen. Blackmores’ shares were 5.5 per cent higher at $96.15 at 1145 AEST.


1 comment

  1. Vic Cherikoff posted on August 29, 2017

    And it is only a matter of time before consumers discover that synthetic alphabet vitamins are doing us more harm than good. So far, vitamins A, B, C, D, E and K and omega-3 fatty acids have been shown to be better absorbed and safer when consumed as whole foods (or from sunshine exposure as with vitamin D) rather than as synthetic chemicals. And just this month there was an interim study that suggests several B vitamins in male smokers appear to be linked with a higher rate of lung cancer. Looking back the evidence exists, it is just that no one is listening: In a study published in The New England Journal of Medicine in 1994, 29,000 Finnish men, all smokers, had been given daily vitamin E, beta-carotene, both or a placebo. The study found that those who had taken beta-carotene for five to eight years were more likely to die from lung cancer or heart disease. Two years later the same journal published another study on vitamin supplements. In it, 18,000 people who were at an increased risk of lung cancer because of asbestos exposure or smoking received a combination of vitamin A and beta-carotene, or a placebo. Investigators stopped the study when they found that the risk of death from lung cancer for those who took the vitamins was 46 per cent higher. Then, in 2004, a review of 14 randomised trials for the Cochrane Database found that the supplemental vitamins A, C, E and beta-carotene, and a mineral, selenium, taken to prevent intestinal cancers, actually increased mortality. Another review, published in 2005 in the Annals of Internal Medicine, found that in 19 trials of nearly 136,000 people, supplemental vitamin E increased mortality. Also that year, a study of people with vascular disease or diabetes found that vitamin E increased the risk of heart failure. And in 2011, a study published in the Journal of the American Medical Association tied vitamin E supplements to an increased risk of prostate cancer. Finally, last year, a Cochrane review found that “beta carotene and vitamin E seem to increase mortality, and so may higher doses of vitamin A.” Source: reply

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