Blackmores China sales 'below expectations' for Q3 as firm announces $43m manufacturing acquisition
The rise in profits came on the back of net sales of $434m, up 8.5% from the prior corresponding period.
Blackmores' sales in China stood at $102m, up 21% year-on-year.
However, CEO Richard Henfrey said this was below expectations, "mainly as a result of the impact of supply challenges and some disruption due to customer trading term re-negotiations, with a stronger fourth quarter expected".
At the end of Q2, the firm's year-on-year growth in China was 27%.
On the domestic front, Henfrey said the firm had made solid market share gains in Australia over the last quarter, and remained "the clear number one brand in Australia in both total market and domestic sales".
"This was a solid result, notwithstanding the impact of supply challenges over the period. Blackmores has a strong commitment to Australian and New Zealand manufacturing, and recent structural changes in the sector have affected the supply continuity of many of our smaller lines and brands, as well as export sales in the second and third quarters," he said.
"We finished the quarter in a much better supply position and we expect this to continue to improve in the coming months."
The firm's established Asia businesses experienced growth of 20% in constant currency terms, with Indonesia, Korea, Taiwan and Hong Kong performing well.
Net sales of $79m at practitioner-only outfit Bioceuticals were up 11% from the prior corresponding period. It is now expected to further benefit from the recent extended distribution of its IsoWhey products to new sales channels.
Blackmores also announced today that it had acquired 100% of the Catalent Australia tablet and soft-gel capsule manufacturing facility in Braeside, Victoria, for $43.2m.
The company said the deal acquisition would support its "future growth and product innovation with strong research and development capabilities, and provide greater control over production".
Existing partners
Blackmores has worked with Catalent for over 30 years, and stressed that it would continue to work with its other contract manufacturing partners despite the deal.
"Our strategy will be to continue to source a significant proportion of our products from our existing contract manufacturing partners, and we will supplement this with our own manufacturing capacity through the Braeside facility," said Henfrey.
Meanwhile, former McDonald's supply chain exec Jackie McArthur has been appointed to the board as Non-Executive Director.
Blackmores chairman Stephen Carter said: "She has lived in Singapore and led a complex and far-reaching supply chain for a global business across 38 countries, from China and South East Asia to the Middle East. She is passionate about corporate social responsibility, diversity, and developing engaged workforces.”
Looking ahead, Henfrey said Blackmores would continue to invest in its brands, particularly in China.
"The board expects our current growth trajectory will continue, and that we will deliver good profit growth for the full year," he added.
