Vitamin company Blackmores has scrapped its interim dividend and slashed its full-year profit guidance, blaming it on adverse costs and an almighty headache from the coronavirus outbreak.
Blackmores has told shareholders it expects its full-year net profit to be between $17 million and $21 million.
That compares with a full-year net profit of $53 million for the fiscal year ending June 30, 2019. In itself, the 2019 result was down 24 per cent on previous year.
Shares in the company fell by as much as 23 per cent to $68.50 upon it emerging from a two-day trading halt on Wednesday, to an 18-month low. They were still 14.9 per cent lower shortly before midday, at $76.11.
In an update to the market, Blackmores said it expected the deadly coronavirus epidemic to lead to at least two to three months of challenges to its China sales and supply.
The virus, which has killed more than 1000 people, was renamed COVID-19 on Tuesday as world health authorities said a vaccine might be 18 months away.
Blackmores’ full-year result will also be affected by its transition to manufacturing in the second half, with about $13 million in adverse costs expected.
In light of the significant deterioration in the outlook for the second half, the board had decided not to pay an interim dividend to conserve cash for operations, Blackmores said.
Chairman Brent Wallace said the board understood shareholders would be “bitterly disappointed” with the unsatisfactory results.
He noted that the company had a mostly new leadership team led by chief executive Alastair Symington, who joined the business in late 2019.
“This team has quickly made inroads to identify the challenges facing the business and to progress a plan to return the company to an acceptable level of performance,” Mr Wallace said.
Mr Symington said that despite the challenges in the second half, Blackmores’ board and management team were confident and optimistic about the company’s future.
Blackmores’ brand metrics were the strongest they had been for many years, he said.
“We have the No.1 market position in Australia and a number of Asian markets, and we are quickly building a much stronger team in China,” Mr Symington said.