The Blackmores Limited (ASX: BKL) share price is charging higher following the release of its half year results.
At the time of writing, the health supplements company's shares are up 4% to $77.17.
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How did Blackmores fare in the first half?
For the six months ended 31 December, Blackmores reported revenue of $302.6 million. This represents a 3% increase on the prior corresponding period or 4% in constant currency.
This was driven by a 13% increase in International revenue and a 25% lift in China revenue, which offset a 10% decline in ANZ revenue to $148 million.
During the half, Blackmores received $10.4 million in government assistance through the JobKeeper program. However, since the end of the period, it has decided that it received more than necessary. As such, it will return $2.4 million of pre-tax Australian JobKeeper funds during the second half.
In respect to its earnings, Blackmores reported an 8% increase in underlying net profit after tax to $19.4 million.
This improved profitability has allowed the Blackmores Board to reinstate its dividend after a one-year hiatus. It has declared a fully franked interim dividend of 29 cents per share.
Management commentary
Blackmores' Chief Executive Officer, Alastair Symington, appeared to be pleased with the half.
He said: "This time last year we outlined our three-year strategy to set us on the path for sustainable, profitable growth. Since then, we have taken the necessary steps to hit important turnaround milestones and made positive strides toward simplifying our operating model in line with our new strategic direction."
"The strengthening of our balance sheet, ability to pay down debt and move to a positive net cash position enabled us to step up investments in Asia. This has resulted in accelerated growth in our key markets in Asia in the first half of FY21."
Mr Symington was particularly pleased given the tough trading conditions it was facing due to COVID-19. He remains confident there will be more of the same in the second half.
He explained: "Our transformation program and first half result have been achieved despite the disruptions and uncertainty brought on by COVID-19 which affected traditional retail channels and shopper behaviour in Australia."
"We remain focused in the second half on continuing to deliver against our strategic priorities. I am confident we will delight our consumers by giving a more distinctive brand experience with Blackmores, BioCeuticals and PAW by Blackmores while maintaining cost discipline and operational excellence to support future growth and shareholder value creation," he added.
Outlook
While no real guidance has been provided for the second half, management has warned investors that it could be a tough period.
Although it expects growth in the Asia market, the core ANZ market remains challenging. It explained:
"As we look to the second half, revenue growth in Asia will continue with positive signs of health and economic recovery underway. The Australian vitamin and supplement market will continue to face structural challenges as international borders remain closed and the focus on vaccine rollout will disrupt consumer behaviour for at least the rest of the 2021 calendar year."
"Despite a full half of realisation from our 1 October price increases, revenue for the second half will be slightly lower than the first half which was impacted by seasonal and key customer events."
"In the second half, we will maintain our focus on cost management. For the remainder of the year we will respond to changing retail demands and restore much needed brand investments to levels before the onset of the pandemic. Blackmores remains mindful of the ongoing uncertainty around COVID-19."
Following today's gain, the Blackmores share price is up 10.5% over the last 12 months.
