The Blackmores Limited (ASX: BKL) share price has returned from its trading halt and crashed lower on Wednesday.
At the time of writing the health supplements company's shares are down 16% to $74.99. They were at one stage down as much as 23% to $68.50.
What is the Blackmores share price crashing lower?
Investors have been hitting the sell button this morning after Blackmores released an update on its first half results and its expectations for the full year.
According to the release, Blackmores expects to report a first half statutory NPAT of $18.3 million with an underlying NPAT of $18 million. The latter represents a 47% decline on the prior corresponding period and falls short of its guidance.
Previously, the company had guided to a profit in line with its second half profit of ~$21 million.
Blackmores Chairman of the Board, Brent Wallace, said "We understand and acknowledge that shareholders will be bitterly disappointed with the financial performance of the business. We acknowledge that these results are completely unsatisfactory and we have much work to do to restore confidence in Blackmores."
Outlook.
Things look set to worsen for the company in the second half of FY 2020.
A number of cost increases and operational challenges are expected to have a material impact on its full year result.
Revenue in the second half is expected to be similar to that achieved in the first half, though due to the above issues, full year net profit after tax is expected in the range of just $17 million to $21 million. This is down from $55 million in FY 2019.
Given that Blackmores is expecting a profit of $18 million in the first half, this implies a loss of $1 million to a profit of $3 million in the second half.
The company's new chief executive officer, Alastair Symington, said: "There is a lot of work to do to restore the trust of our shareholders and we are resolute in our commitment to doing what it takes to achieve this."
"Our new management team is progressing plans to turn around the business, which involves getting better control and visibility of our fixed costs, improving gross margins and significantly improving quality of our earnings in a more sustainable way."
In light of the significant deterioration in its outlook, the Blackmores board has made a decision not to pay an interim dividend in order to conserve cash.
The company also provided an update on the impact of the coronavirus outbreak. Adding: "While the outbreak has resulted in increased demand for key immunity products in Australia and Asia, the impact of the sales has been countered by supply chain disruptions across the region as a result of the contagion."