TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH BLACKMORES (ASX:BKL) CEO, CHRISTINE HOLGATEClive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me from Blackmores for its first half results is CEO, Christine Holgate.
Christine welcome back. Net profit came in at 14.2 million up 7.3% on the same time last year, how do you rate the result in what has been a challenging retail environment?
Christine Holgate: Thanks Clive, we’re actually really pleased with the result and the result’s been driven by a combination of different factors. So I think we’ve had a solid result here in Australia in a very difficult trading environment, but we’ve also had you know, quite significant growth in Asia which has helped support that extra performance. And coupled with that is the work we’ve been doing with our looking at our supply chain, has really helped underline a better profit growth and even our sales number. So we are very pleased.
Clive Tompkins: So Christine, would it be fair to suggest that vitamins and dietary supplements are something that consumers are not prepared to cut from shopping lists?
Christine Holgate: Well I think it’s definitely fair to say that there’s a growing demand for this type of product and it’s absolutely now part of a lot of families – part of their health routine that they have. But what I’d also say is that in Australia the retail market has been very challenging for a number of very different factors. So we haven’t seen anything which has really impacted scan data to suggest anything other than health is very important.
Clive Tompkins: Now to Asia, I see you’re continuing your expansion with a launch in Korea. Can you tell us about the move?
Christine Holgate: We launched in Korea in December with an Omega product which many Koreans take in winter time to keep their circulation going. We’re going to launch a new Triple Action Multi, specially developed for Korea at the end of March. And again, that’s got to do with people preparing their bodies for summer.
Around April time we’ll be launching a kids’ chewable and that’s very important in Korea because that’s just before the time children in Korea do their annual test, and parents really want to try and give their kids the best support to be able to go into that exam.
So it’s a very seasonally driven market, perhaps more than ever I’ve seen before and it has got much more clearer delineation in the different types of products they have.
Clive Tompkins: And still on Asia, what were the sales for this half?
Christine Holgate: Sales growth in Asia for the half was 25% and that comes in the first quarter being at 10 and the second quarter being almost 45%. I think what I am very pleased about is yes, we launched in Korea and that contributed to those figures, but actually really underlying in our business we saw really strong growth in Asia half and half. So Malaysia was up 18%, Thailand was up over 10% and that compares to the same half last year, where a big part of that half was dominated with the benefits coming through after Swine Flu and the whole scare around immunity.
Clive Tompkins: Christine, last year you rolled out several new initiatives and investment in Natural Pet Products Company PAW, new products and a website that facilitates online sales. Can you provide an update on how each is performing, starting with PAW?
Christine Holgate: Of course, look we bought PAW in July last year - so July 2010. I’m really pleased to say that we’ve now completely fully integrated that business into our business. So if you come along to Warriewood, you’ll actually see the PAW products going round our distribution belt and out of our warehouse.
We’ve now completely rebranded that product and upgraded a lot of the ingredients in those products; we did a launch to the trade last week. We launched the consumer market last week at the new Pet Trade Fair in Melbourne and you’ll start to see our products coming through on the shelves in pet speciality shops from March onwards. So we’re really excited about that, it’s a whole new field for Blackmores. It’s one that’s received really positive feedback from people in pet health to have a combination of a company like Blackmores endorsing and giving people the quality for those products. It’s really reassuring for mums, so we’re really looking forward to doing it. So that’s been terrific.
Innovation always has to be at the heart of our business and so we will continue to launch new products. So we’ve launched a number of new products in the first half of this year and you’ll have seen we did a whole Probiotic range. For the second half of this financial year I think we’ve probably got an even more exciting roll out of products to come. We’re particularly excited about our new Flexi Gel cream that we’re going to be having, which is a sort of natural alternative to Voltaren.
And we’ve got new fish oil products coming, a new multi product coming – it’s going to be called a Nutrarich Multi, so we’re quite excited about the pipeline as well. But I think the day that I come to you Clive and tell you that innovation shouldn’t be important and it isn’t at the core of our business, is the day that you should be phoning my Chairman. But I hope it will always be at the core of everything that we do.
And our website – our real website is not so much about online selling, it’s about engaging with our consumers and having a personal interaction with them. And we use social media, enormously actually, to actually be able to have that two way dialogue with our customers and that only continues to expand. We believe we’ve got the biggest online natural health website, probably in the world.
Clive Tompkins: Christine now to your share price. The stocks trading at or near a 52 week high just over the $30 mark, where does that put your market cap and how much are the shares up over the year?
Christine Holgate: It puts our market cap just over $500 million; I think it’s about 505 to be precise, and it puts us up in the last six months about 25%. I think that shows to shareholders that we just announced yesterday that we will be giving a good first half dividend again at 44 cents. And I think that shows to investors that we continue to give both good capital gains growth and a good yield on our stock.
Clive Tompkins: So with the market cap around $500 million, are acquisitions on the cards and if so, where?
Christine Holgate: If something comes up and it fits my strategy and takes us where we want to go, then clearly we’d look at it. I don’t personally think we need to buy something to deploy what we want to do, so we’ll have to sort of wait and see on that agenda.
Clive Tompkins: And Christine last question. What’s ahead for shareholders over the next six months, barring a major acquisition?
Christine Holgate: Well I’d like to say that we will continue to grow our business. I think many businesses here in Australia are going to have a very difficult challenging six months. I think some of the steps that we’ve put in place as we spoke about earlier, whether that’s the growth of our Asian business, the launch of new businesses like PAW or the work we continue to do on our supply chain, will ensure that we actually not just protect, but we will deliver to shareholders a profit growth at the end of the year.
Now, personally I think that’s a pretty good outcome and I think it will set us an even stronger foundation for the year ahead.
Clive Tompkins: Christine thanks as always for the update.
ENDS
