Blackmores has become the latest FMCG company to feel the impact of the coronavirus outbreak as it slashed its full-year profit guidance on Wednesday.
The vitamins and supplements company said it was downgrading expectations due to “adverse costs in addition to challenges associated with coronavirus”.
“The quality of earnings and underlying net profit after tax has not met expectations,” the company said in a statement to the ASX.
Full-year net profit is now expected to be between $17 million and $21 million.
First-half statutory net profit after tax is expected to be $18.3 million, a significant drop from $34.3 million a year ago, while revenue of $309.2 million is expected, down 5 per cent on a year ago.
The coronavirus outbreak is expected to cause problems in its China segment for at least two to three months.
The company’s transition to manufacturing program also added pressure in the second half with an “adverse cost of goods” of around $13 million expected.
Chairman Brent Wallace said the board understands that shareholders will be “bitterly disappointed” with the financial performance of the business.
“We acknowledge that these results are completely unsatisfactory and we have much work to do to restore confidence in Blackmores,” he said.
Chief executive Alastair Symington said the board is, however, optimistic about the company’s future.
“Our new management team is progressing plans to turn around the business, which involves getting better control and visibility of our fixed costs, improving gross margins and significantly improving quality of our earnings in a more sustainable way,” Symington said.
“We have the number one market position in Australia and a number of Asian markets, and we are quickly building a much stronger team in China.”
The company’s trading halt which was granted on Monday has now lifted.
Read our interview with Blackmores CEO Alastair Symington in our quarterly magazine here.