TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH BLACKMORES (ASK:BKL) CEO, CHRISTINE HOLGATEClive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me from Blackmores to discuss its third quarter results is CEO, Christine Holgate. Christine welcome back, what were the key numbers?
Christine Holgate: We had a really great revenue result at nearly 53 million and that really underpinned where we’re up to in the third quarter today, so 162 million up 12% in sales and our profit up for the three quarters 21% at 19 million. I guess another key number is in all of our markets we’re actually growing, continuing to grow faster than the local markets, so we’re gaining market share and momentum and that’s clearly encouraging.
Clive Tompkins: And Christine what was the split between domestic and international?
Christine Holgate: About 84%, 85% of our sales continue to come from Australia, about 15% from Asia. I guess that really masks the fact that our Asian businesses are growing much higher, but because of the strong Australian dollar, that’s diluting in the translation back. But what we are very pleased about is both of those, even in Australian dollar, are continuing to grow and held up.
Clive Tompkins: And how does this quarter compare to the same period last year?
Christine Holgate: It compares very strong. I mean on a sales level our sales are up 8% and that performance is in a sense diluted because Asia, when the strong Asian sales convert to a strong Aussie dollar, they look like they’re only growing at 1% but in constant currencies they’re growing at 26%. My Australian business is growing around 13% which clearly is very strong.Another key number is that our profits are up 68% quarter on quarter now, clearly that’s an exceptional result. That’s really driven from the fact that our Australian business is growing very strong and we’re continuing to get efficiencies from Warriewood, the major investment we made last year. But equally I think to just put it into some comparison, this time last year we did have some unusual costs with that move to Warriewood which, you know, don’t really make a 68% growth like for like, but it does really underpin where we’re at in the three quarters and we’re very pleased with the performance.
Clive Tompkins: Christine what were the drivers?
Christine Holgate: I think there were a number of drivers. The first thing was we’ve invested very heavily about getting, continuing to get closer to our customer. Whether that’s more sales people, more training, more merchandising or even the launch of our new website. Secondly it’s the continued drive with product development and innovation. I think to date we’ve launched over sixty products this year alone, which is a phenomenal achievement for the team and one we’re very proud of and it’s also investing in our people. And I think finally, the results of the benefits of moving to Warriewood and that major investment we made last year, are really beginning to pay off and you can see that in our results.Our growth at EBITDA is almost 30% for the nine months and I think that’s a fantastic reflection of us really beginning to get the benefits of our major move and investment to Warriewood last year. Now clearly it’s also about the growth in our sales and improved efficiencies over that part of the business, but where we’re really starting to see now the benefits of this marginal cost returns and I think 30% growth - you know we’re quietly very pleased.
Clive Tompkins: Christine you mentioned that Asian sales were impacted by our strong dollar. Is currency hedging an option and is this something you’ll raise with your new CFO?
Christine Holgate: We do, do an element of hedging in our business today and hindsight is a wonderful thing if we could’ve foreseen that we would be, you know the US dollar would be at 93 cents when it was 66 cents this time last year. But we do have a natural hedge in our business as well Clive, because an enormous amount of our raw materials are bought from overseas, so we’re able to actually use the strong Aussie dollar to improve our buying capability. So I think this year we’ve successfully been able to manage that as not having a negative impact on our bottom line and actually having a good impact. Clearly it’ll be something that we’ll be asking our new CFO to look at, because we want to continue to grow in our Asian businesses and use those currencies more efficiently.
Clive Tompkins: Blackmores concluded a new Enterprise Agreement in December with 96% of staff supporting the new terms of employment, has this contributed to the result?
Christine Holgate: I’m always a believer that it’s really our staff that drives the result and I think the Agreement is reflective of the absolute commitment and contribution that the staff at Blackmores gives to us. And that’s also just been underpinned with the recent Climate Survey that we had inside the Organisation where the passion and commitment of our staff was rated at something like 95% - so extremely high.The Agreement itself is actually very much in line with leading companies. So we do invest, you know, very strongly with our employees and reward them, we believe in the sort of, you know - fairly for their roles that we do. But really Blackmores is the place to work which is about respecting them as much as the reward part and I think that too comes through in the collective agreement.
Clive Tompkins: And I notice you’ve just launched a new website aimed at building a community dedicated to natural health and wellbeing, what’s the thinking behind this initiative?
Christine Holgate: First of all, we’re all far more interested in having messages that are much more relevant to us as a person as opposed to a mass medium. And this gives us a great way that we can interact with our customers directly. So the website isn’t about just selling something or communicating something, it’s about having a dialogue with our customers. It’s about us listening to them as much as us telling them and sharing information with them. And that’s really what it’s about; it’s about our customers engaging with us and telling us what they need, while we share really important information back with them. But actually also with the broader community, what’s so fantastic is to go and look at all of our social media sites and see people twittering about the latest type of research and it’s really exciting.
Clive Tompkins: And will consumers also be able to buy product online?
Christine Holgate: Consumers can buy products online. What we’ve done is partner with major retailing groups who provide what I call, the back of house part, to the online part of our channel. But really the site is about engaging, training, educating, sharing of knowledge and hearing back from our consumers and also giving our consumers the ability to share knowledge amongst themselves. So we have very active bloggers on our site which is fantastic, absolutely fantastic.Next or next week on May the 9th, Blackmores are sponsoring the Mother’s Day run and it’s great to see already people tweeting away about fitness and health programmes in preparation for it.
Clive Tompkins: Christine Holgate thanks for the update.
Christine Holgate: Thank you.
