Leading Australian supplements and vitamins brand Blackmores has slashed its full-year profit guidance, quoting “adverse costs in relation to challenges associated with coronavirus”. The company has a valuable export trade with China.
In a statement issued last week, the company said that that first-half net profit after tax is expected to be AUS18.3 million, a significant drop from $34.3 million a year ago. “The quality of earnings and underlying net profit after tax has not met expectations,” the statement added.
Commenting on the coronavirus outbreak, the company said that while it had seen increased demand for key immunity products in Australia and Asia, the impacts of sales had “been countered by supply chain disruptions across the region as a result of the contagion”.
Blackmores said sales in China had also been impacted by ‘stay had home’ instructions in parts of the country, while channels which rely on the free flow of passengers (duty-free, for example) had also been adversely affected.
Other key factors impacting profitability identified in the statement include efficiency improvements at the company’s Braeside (Australia) manufacturing site, costs associated with meeting new labelling requirements and action being undertaken to address margin erosion.