Blackmores shares have fallen to a 14-month, dropping below $100, after the vitamin and health product supplier's first-quarter net profit slumped 46.6 per cent due to lower Australian sales.
The company - which has delivered phenomenal earnings over the past two years thanks to strong local and Chinese demand for its products - blamed a 40 per cent drop in local sales on retailers reducing excess stock and on changing buying patterns of Chinese exporters.
Chief executive Christine Holgate said the lower sales had impacted the group's ability to recover operational costs, which hurt earnings. But conditions had started to improve at the end of September.
"Pleasingly, we entered the second quarter with an improving sales and profit trajectory, there are positive sales trends that indicate overstocking is easing, consumer demand remains robust and we have been able to capture significant new sales in China," she said.
Net profit for the three months to September 30 nearly halved to $12 million, from $22.6 million, with sales down 8.1 per cent at $149 million.
Blackmores shares fell as much as 6.2 per cent to $97.91 shortly after the results were released.
At 1121 AEDT, they were down $3.29 cents, or 3.15 per cent, at $101.10 - down sharply from its record high of $220.90 in January.
The group's first-quarter sales through Australian retailers dropped to $68 million, from $115.4 million a year earlier.
Blackmores estimates the impact of Australian retailers reducing excess stock to be $17 million with a further $28 million resulting from changes to the way exporters buy through Australian retailers.
"Around 20 per cent of Australian sales in the first quarter are estimated to be to consumers in China," Ms Holgate said on Thursday in a statement.
However, its China business more than tripled, contributing $31 million which was up 220 per cent on the previous corresponding period.
"The rapid growth of sales through these channels is encouraging as it validates continuing demand for our products in China," Ms Holgate said.
