An impressive full-year results announcement proved to be record-breaking for Blackmores Limited (ASX: BKL). The outcome was a lift in share price by 7.16% on August 25, and another 10.57% on August 26, but compared to the previous eight months this boost in share price is significantly small. Since January 2, Blackmores' share price has risen by 157%. Investors who have stayed with Blackmores for more than a year have been rewarded handsomely.
Following are the key highlights of the 2015 full-year results:
- Total annual sales of $471.6 million increased by 36% from the previous year.
- Net profit after tax of $46.6 million increased by 83% from the previous year.
- Net debt decreased by 87% to $7.1 million from the previous year.
- Earnings per share of 270.7 cents increased by 81.4% from the previous year.
The 2015 financial year results represented solid achievement by Blackmores across the business, not only in sales growth and profit, but also lower debt. The strategy behind this success involved several elements.
First and foremost was the improved focus on the Australia and New Zealand business. Sales in Australia increased by 43%, whereas in New Zealand sales were up by 13%. The Australian market had total sales of $317.4 million, which is the largest business segment. New and improved products, better marketing, in-store brand merchandising and increased demand from Chinese tourists were among the main reasons behind the success.
Blackmores' Asian business recorded a 26% lift in sales to $84 million. Asia is a key growth market for Blackmores to secure long-term profit growth. In Asia, sales increased strongly from the previous year in Malaysia, South Korea, Singapore and Hong Kong. Only in Thailand sales were down by 7%, but it still remained a highly profitable market, contributing $6.3 million to earnings.
In China, sales have multiplied, supported by Blackmores' decision to establish a Wholly Foreign-Owned Enterprise (WFOE) in 2014. Blackmores believes opportunities in China for growth are enormous, but requires enhancements in facilities and supply chain to fully serve this market.
The management at Blackmores announced six weeks of bonus pay for the staff as part of its profit sharing scheme. The shareholders were also rewarded with a 60% increase in dividend over last year. A good initiative by management to keep staff and shareholders motivated.
Foolish takeaway
A year ago, Blackmores' share price was $30, and today the share price is trading above $100. That's an increase of more than 233%, and once dividends are included, the actual growth percentage is higher. It is unlikely that Blackmores is likely to grow at this rate next year. However, it has a great product offering, a reputable brand and good growth opportunities. This definitely makes this stock worth watching.
