The Blackmores Limited (ASX: BKL) share price is jumping after the vitamin business revealed its FY21 result to the market.
Blackmores FY21 result
The company reported that its group revenue increased by 1.3% to $575.9 million. This was 3.2% growth in constant currency terms.
This increase in revenue helped the gross profit margin rise by 4.6% to $301 million, with the gross profit margin increase by 1.6 percentage points to 52.3%.
Underlying group EBIT (EBIT explained) went up 51.7% to $47.6 million. The underlying EBIT margin increased by 2.7 percentage points to 8.3%. Underlying net profit soared 61.2% to $25.4 million.
Looking at the statutory net profit, that increased by 89.4% to $28.6 million.
Breaking it down into different segments, the Australian segment saw revenue fall 14%, but underlying EBIT grew 1.7%. The international segment grew revenue by 17.7%, whilst underlying EBIT soared 49.5%. The China segment experienced revenue growth of 27.8% and underlying EBIT climbed from $0.2 million to $14.3 million.
It’s interesting that China is a source of growth for Blackmores, whereas some companies like A2 Milk Company Ltd (ASX: A2M) are suffering.
Dividend and balance sheet
Blackmores’ board decided to declare a final dividend of 42 cents per share. That means the full year dividend is 71 cents per share.
It ended the 2021 financial year with net cash of $70.1 million.
Management said that the company maintains a disciplined approach to capital management and retains flexibility to take advantage of growth opportunities as they arise to ensure capital is deployed in a way that drives long-term shareholder value and returns.
Outlook for Blackmores and the share price
Management said that for FY22 and beyond, the outlook remains “positive” in its international and China segments with strong sales momentum starting FY22.
In ‘international’ growth will be supported by the launch of new products and expansion of its Halal offering as well as the expansion into India in the first quarter of FY22. In China, it’s launching new products and building its market share on e-commerce platforms.
But in Australia and New Zealand, it’s expecting challenging conditions to persist in the vitamins and supplements market as international borders remain closed and state lockdowns impacting retail spending and foot traffic. However, it’s expecting e-commerce and its pet health brand to be a source of growth.
The supply chain investments it has made will help its ability to meet customer demand and support entry into new markets. Cost savings will help support profit margin expansion.
Investments in digital commerce and operational transformation will supplement broader supply chain and operating spending initiatives.
Blackmores is expecting sales growth internationally to more than offset difficulties in the local markets.
The Blackmores share price is up 28% over the past year, but it’s still a long way below the previous all time highs a few years ago. I’m not sure how much profit can grow over the long-term, so I’d prefer to look at other businesses.
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