Here’s why Blackmores (ASX:BKL) should be on investors’ radar

  • February 24, 2021 09:43 AM AEDT
  • Aayush
    Research Analyst Aayush
    17 Posts

    Aayush is a Research Analyst at Kalkine, with rich experience of over 3 years catering to capital markets. He has been a sell side equity advisor for two years and is currently dwelling deep into the equity research. He holds MBA in finance degree an...

Here’s why Blackmores (ASX:BKL) should be on investors’ radar

Source: Shutterstock

Summary

  • Blackmores reported a 3 per cent increase in revenue to $302.59 million in 1H FY21 over 1H FY20.
  • The EBIT has remained almost flat at $25.84 million.
  • The management expects the revenue growth to continue in Asia as positive signs of economic recovery are visible.
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On 24 February 2021, Blackmores Limited (ASX:BKL) announced its earnings and business update for six months ended 31 December 2020. The reported revenue was up by 3 per cent, from $293.48 million in 1H FY20 (pcp) to $302.59 million in 1H FY21. Higher revenue has also been materialised into a higher net profit of $20.83 million, up by $2.4 million from $18.4 million reported in pcp.

The management was happy that the underlying momentum had continued for its international segment from FY20. The revenue for the first half of FY21 grew by 19 per cent to $78 million at constant foreign exchange rates. Other key international markets – Thailand and Malaysia also recorded double-digit growth, and the business in Vietnam also performed up to the mark.

The EBIT has remained almost flat at $25.84 million compared to $25.47 million reported in pcp. However, for the international business, EBIT grew by a healthy 61 per cent during the reported period, which is a faster rate than revenue growth.

Read More: Blackmores Completes $92 million Fully Underwritten Institutional Placement

Financial Position

The group's total net assets have increased by $67 million to $374 million, while the total current assets decreased marginally by $3 million to $304 million. The receivables for the reported period stood at $114 million, which was $16 million higher than June 2020 on the back of higher revenue during the final months of 1H FY21.

Image Source: Copyright © 2021 Kalkine Media Pty Ltd.

The group also reported a lower inventory by $20 million to $101 million, as compared to June 2020, as higher sales were executed in November and December 2020 and due to efficient inventory management. However, the group still needs to resolve some out of stocks in the BioCeuticals brand, requiring some further investment in inventory in 2H FY21.

Outlook

The management expects the revenue growth to continue in Asia as positive signs of economic recovery are visible. On the contrary, the vitamin and supplement market in Australia would continue to face structural challenges.

The management is also planning to reinvest savings generated through its Business Improvement Plan (BIP) into much-needed brand investment in 2HFY21.

Stock Performance

Blackmores’ share price was last traded at A$74.1 on 23 February 2021. Due to a mild downtrend in the last three months, the stock has delivered a negative return of 6.4 per cent. The one-year return stands at 8.1 per cent.

 

 


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