Blackmores' annual financials: China and wider Asia region propel growth amid subdued domestic market

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The company's business in China is based mainly on cross-border e-commerce sales, which it said was currently growing at over 20% yearly.

Blackmores recorded 9% year-on-year revenue growth to A$601.1m for the financial year ending in June, with China and overall Asia sales contributing significantly to this increase.

The firm made A$69.2m in profits after taxes, up from last year's A$58m. Sales to China — which consisted of key exports and in-country sales — stood at A$143m, representing a 22% year-on-year increase.

Blackmores' official financial report stated that consumer demand "remains strong across all e-commerce platforms, while Blackmores' sales channels in China continue to evolve".

Indeed, the company's business in China is based mainly on cross-border e-commerce sales, which it said was currently growing at over 20% yearly.

It also opened a flagship WeChat store and signed an exclusive NPD (new product development) partnership with Kaola.com, strengthening its digital platform and retail partnerships in China.

Meanwhile, Blackmores maintains an offline business selling a small range of food products, such as fish oil and infant formula in brick-and-mortar stores in China.

Outside of China, the firm's sales in Asia reached A$82m, up 20% from the previous year. Positive performances in Singapore (22% sales increase) and South Korea (91% sales increase) were largely responsible for this growth, while Malaysia and Thailand also saw continued growth.

In Indonesia, the company’s business in Indonesia contributed 77% growth compared to last year.

In the report, CEO Richard Henfrey said: "Indonesia is a young market, relatively speaking, with one of the highest birth rates in the region at 20 births annually per thousand population.

"We see plenty of growth opportunity in Asia beyond the China phenomenon. Our joint venture in Indonesia, Kalbe Blackmores Nutrition, is almost two years old and is already building a winning position in a market that is expected to be the fourth largest economy globally by 2050."

In Australia and New Zealand, however, Blackmores' sales remained mostly flat at A$266m, with the broader consumer market remaining "subdued", and China-influenced sales via Australian retailers continuing to move to direct export channels.

Supply chain blues

Despite these results, Blackmores has been dogged by supply constraints, with sales across many of its brands and regions affected during the financial year.

This was attributed to factors such as changes in the Australian contract manufacturing sector, made worse by long lead times needed to develop natural healthcare products.

Henfrey said in the report: "We've always had a strong reliance on our suppliers to assist us in minimising this lead time. However, this continued to challenge us throughout the year. The number of lines out of stock was minimal at the close of the financial year, and Blackmores has implemented several strategies and interventions to mitigate this challenge in the future.

"These changes include introducing new technology and processes to assist with global sales forecasting and demand planning. The announcement in April of Blackmores' plans to acquire the Catalent Australia manufacturing facility in Victoria will also give us greater control over production volumes.

"The focus of the coming year will be to develop our internal IT systems to provide a greater degree of automation and sophistication in our financial and supply chain capability. Australia and China in particular remain highly competitive markets, but Blackmores' leading position and strong brands, coupled with further investment in driving brand awareness and extending our lead in research and education through the Blackmores Institute, gives us confidence in the future growth strategy for the Group."