Is the Blackmores Limited (ASX: BKL) share price a buy today based on the third quarter trading result?
Blackmores describes itself as Australia’s leading natural health company. Maurice Blackmore founded the company in the 1930s. Blackmores has a number of different brands, not just the well-recognised Blackmores brand. It operates BioCeuticals, the Blackmores Institute, Fusion Health & Oriental Botanicals, Impromy, IsoWhey and Pure Animal Wellbeing (PAW).
Blackmores FY19 Third Quarter Result
Blackmores revealed it had generated a net profit of $44 million in the first nine months of FY19, which was down 14% compared to the first nine months of FY18. However, revenue was up 6% to $460 million.
In the March 2019 quarter Blackmores only made $10 million of net profit, which was down 43% compared to the March 2018 quarter. Revenue was also down 4% to $141 million. However, pleasingly operating expenses were down 1%.
Blackmores Australia & New Zealand achieved a 2.1% improvement in the gross profit margin, but the revenue fell by 26% to $54 million. However, year to date revenue is up 3% on last year.
In the Blackmores Asia division, Chinese sales were up 19%, Taiwan sales were up 81%, Hong Kong sales were up 18%, South Korean sales were up 13% and Malaysian sales rose 32%. The Indonesian joint venture’s sales were up 99%. Overall, ‘Other Asia’ revenue grew 32%.
Is The Blackmores Share Price A Buy?
The vitamin company is still expect “modest” full year revenue growth, it doesn’t expect the second half profit performance to be ahead of the first half result.
To try to turn the profit side of things around management is looking to make $60 million of savings over three years. However, management warned that there will be some one-off costs in the fourth quarter of FY19.
Blackmores is not the exciting Asian growth story that it used to be. It is valued at 22 times the financial year 2020 estimated earnings at the pre-open price, according to CommSec. I would rather invest in A2 Milk Company Ltd (ASX: A2M) for the Asian growth potential.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.