Blackmores Limited

Announcement of Interim Leadership Arrangements: Blackmores Limited (ASX: BKL) had provided an update with respect to business’ leadership arrangements after the announcement of Richard Henfrey’s resignation from the designation of Chief Executive Officer (or CEO) and Managing Director. The company stated that Executive Director Marcus C Blackmore AM had joined the business as interim CEO, effective from 1 April 2019. Also, in another release, the company made an announcement about the appointment of Christine Holman to Board as Non-Executive Director. In 1H FY 2019, the company generated revenues amounting to $319 million which implies a rise of 11% on prior corresponding period. It posted a profit of $34 million. The company’s management had stated that posting strong sales reflects the benefits of the continued deployment towards advertising and promotion.


1H FY 2019 Income Statement (Source: Company Reports)

With respect to Australia and New Zealand, the company posted revenues amounting to $144 million which reflects the rise of 19% as compared to the prior corresponding period because of the domestic growth and continued increased levels of sales through Australian retailers who are focussed on servicing China export channels.

Also, the company is having decent liquidity levels as its current ratio stood at 2.06x which reflects YoY improvement of 1.7% demonstrating that the company is in a better position to meet the short-term obligations.

What To Expect From BKL: Blackmores is expected to witness modest growth in the full-year revenues. The company stated that its China sales in third quarter are witnessing the impacts of continuing changes to the way consumers purchase its products as well as higher inventory in the trade and a general softening of the consumer sentiment. Hence, the company does not anticipate the second half profit performance to be ahead of the first half result. However, the company stated that they would be making deployments towards the initiatives to drive future growth.

Stock Recommendation: The stock of Blackmores had delivered the return of -24.81% in the span of three months while, in the time frame of six months, it posted -30.15% return. From the valuations perspective, the company’s stock is quite overvalued as its P/B ratio stood at 7.67x as compared to peer median of 5.65x. Also, the company stated that, apart from China, all other markets are anticipated to perform well and there are expectations that overall sales of the company might improve in the fourth quarter. Given the mix of scenario, we have a close watch on the stock at the current market price of $94.120 per share (up 0.933% on April 04, 2019) andadvice investors to wait for a further correction to get better entry levels.
 

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.