On February 25, Blackmores (ASX: BKL) announced that the revenue in the first half of fiscal year 2020 (H1 FY20, July 1- December 31, 2019) was AUD 303 million, down 5% from the previous year. Net profit was AUD 18.2million, down 47 per cent from a year earlier.
China’s Performance
In the first half of the year, revenue from the China division fell 6 percent to $61.73million, the Blackmores said. Earnings before interest and tax (EBIT) fell 58 percent to AUD 4.88 million, affected by higher ingredients and packaging costs and costs associated with the inventory scrap risk reserve.
Novel coronavirus effect
For Blackmores, performance has also been affected by the epidemic. According to the report, the new epidemic will pose a challenge to sales and logistics in China for at least 2-3 months. The company has cut its full-year profit forecast from AUD 17 million to AUD $21 million, down about 60% from fiscal 2019.
For the future, the company plans to develop pet supplements in China as well as products designed specifically for the country's modern working women, Alastair Symington, CEO, Blcakmores said.
Pet supplement
The pet care market is growing rapidly and the pet supplement space is expanding, especially in China. The pet market is worth $116 million and is expected to grow to $260 million by 2024.
Blackmores subordinate pet brand PAW is a leading pet supplement brand in Australia but has seen a lack of investment and innovation in recent years, so it has huge potential. In addition, the company plans to build a team in China and push to expand its product range.
Working Women product
According to the analysis of Blackmores, Chinese modern working women have the following characteristics.
85% working women are stressed and need to balance work and family;
A strong sense of accomplishment, but also need to look well;
Control the busy and crazy life;
Key player in family decision-making and child care;
High levels of guilt, so look for simple solutions to care for and connect with family, and like quick technical solutions;
Very sensitive to brands and products, want the best.
Working women represent a high level of purchasing power and influence over family purchasing decisions. In addition, young women can lead the category penetration to maximize the life cycle value, fully capture the next generation of potential market opportunities. Therefore, the future will further increase the investment in China.
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