Blackmores' full year profit up 17%, record sales results

Blackmores Limited (ASX: BKL) today announced a 17% increase in full year profit, delivering a $24.3 net profit after tax.

Highlights

• Net profit of $24.3 million - an increase of 17% on last year
• Earnings before interest, tax, depreciation and amortisation (EBITDA) at $40.9 million, an increase of 25%
• Sales up by 7% compared to previous year to $214.9 million
• Earnings per share up 15 % to 146.8 cents
• Final dividend of 70c per share, delivers full year dividend of 112c - up 17%
• Acquisition of Pure Animal Wellbeing Pty Ltd (PAW)

Blackmores Limited (ASX: BKL) today announced a 17% increase in full year profit, delivering a $24.3 net profit after tax. Group sales increased by 7% compared to the previous corresponding period, to $214.9 million.

This reflects a 7% growth in Australian sales and 25% Asian sales growth, in constant currency. In line with the strong growth in net profit and earnings per share, the Board has declared a final dividend of 70 cents per share fully franked, bringing the full year dividend to 112 cents fully franked, a 17% increase on last year. In recognition of the ongoing strength of Blackmores' balance sheet, Directors have decided to suspend the Dividend Reinvestment Plan until further notice.

"It is particularly pleasing to see our profitability growing faster than sales and for EBITDA to increase so significantly in a year of considerable investment in our people, new technology and the new Campus at Warriewood," said Chief Executive Officer Christine Holgate.

"As well as delivering a strong profit result, we're proud of the continued improvements in the strength of our balance sheet. Net assets are up 23% driven by an increase in cash balances, our operating cash flow increased 26%, our gearing ratio decreased from 36.5% to 26.5% and our interest cover has improved from 10 times to 18 times," she said.

"We have implemented a number of new initiatives over the year to help us get closer to our customers including increasing our points of distribution, improving our service and delivering more than 80 new products and formulation improvements across our markets."

"These have seen us outperform in all of our core markets to deliver our eighth year of record sales and profits."

Fourth quarter sales of $53.2 million were in line with expectation, reflecting the general retail environment in Australia, the significantly strengthened Australian dollar and the absence of some of the extraordinary influences of the same period last year such as H1N1 and the government stimulus. Brand health remains strong with Blackmores again awarded Most Trusted Brand in vitamins and supplements by Reader's Digest in Australia and Thailand.

The new Campus facility at Warriewood enabled the natural healthcare company to increase production volumes to accommodate the sales growth, particularly driven by Asia, and has allowed Blackmores to enjoy significant efficiency gains. These increased gains are now offsetting the additional cost to the business of investing in the Campus.

As well as the Campus, Blackmores also invested in additional sales staff and an interactive new website.

Blackmores' Asian business has continued to gain momentum and is now responsible for 10% of Group profit. Profitability of the Asian business has increased more than five-fold. Growth can be attributed to a significant increase in distribution points, increasing the product range with a strong pipeline of new product launches, and implementing new product labels, branding and merchandising to revitalise the presence of the brand across the region.

"We are interested in the integration of the Eastern and Western approaches to health management, and have partnered with Eu Yan Sang, one of Asia's leading healthcare companies with a strong foundation in Traditional Chinese Medicine (TCM) and integrative healthcare", said Ms Holgate.

"Under this agreement, Blackmores has become the first Western brand of dietary supplements in their retail outlets, providing us with an opportunity to further enhance our knowledge of the TCM market."

Blackmores has added a potential new growth platform to the Company with the acquisition of Pure Animal Wellbeing Pty Ltd (PAW) on 2 July 2010. PAW - acquired for $2 million - develops and markets natural dietary supplements and topical products for dogs and cats that are sold in veterinary clinics and specialty stores in Australia, New Zealand and Korea.

"Building on our core expertise in natural health, vitamins and dietary supplements, PAW provides us with a well positioned entry into the fast growing segment of natural health products for pets," said Ms Holgate. The acquisition is expected to be broadly earnings neutral in the 2011 financial year and earnings accretive from the 2012 financial year onwards.

Outlook

"While the challenges of the broader retail and regulatory environment will remain, we are confident we have a strong team and a solid strategy for growth for the future."

Ms Holgate said that the initiatives Blackmores has introduced over the last year to expand our customer reach, to deliver innovative new products, grow the Asian Business and explore new segments have placed the Company well, despite the slowing Australian retail sector.

"Blackmores' brand health is strong and consumers continue to look to our products for health solutions they can trust."

Visit us at: Blackmores Australia

Blackmores Australia provides products, information, advice and knowledge on natural health, vitamins, minerals, herbs and supplements - alternative medicine for every man woman and child.

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