SYDNEY: Blackmores Ltd on Wednesday scrapped its dividend and said it expects this year's profit to more than halve as the coronavirus hit its supply chain, sending the Australian vitamin maker's shares to a near one-year low.
Shares of the company fell more than 23% to A$68.50 at the open, their biggest intraday fall since mid-February last year.
Blackmores will now have to tweak their operations in China as the epidemic has hindered movement of products to and within the country as a determined Chinese government scrambles to stem the spread of the virus.
While the virus outbreak has resulted in increased demand for key immunity products in Australia and Asia, sales have been hurt by supply chain disruptions due to the epidemic, the Sydney-based company said in a statement.
These disruptions are expected to last for at least two to three months, the company said.
Blackmores expects to report an after-tax net profit for the full financial year ending June of A$17 million to A$21 million ($11.41 million to $14.10 million). It had reported a profit of A$53 million last financial year.
"We acknowledge that these results are completely unsatisfactory, and we have much work to do to restore confidence in Blackmores," Chairman Brent Wallace said.
China's strong demand for vitamins health products had fuelled double digit annual sales growth at the company and made its shares very attractive, but Blackmores has recently struggled with Beijing's tougher import rules.
Those rules have led to lower sales through the company's "daigou" network of informal exporters, which make tens of billions of dollars a year selling foreign goods online.
Australian companies heavily exposed to China have started flagging hits to their business from the deadly epidemic that has killed more than 1,000 people and disrupted business activity in the world’s second largest economy.
Australian hearing implant maker Cochlear Ltd cut its full-year profit forecast on Tuesday, blaming the coronavirus outbreak as hospitals in China delayed surgical procedures to limit the spread of the infection.
Blackmores reported first-half underlying profit of A$18 million and revenue of A$303 million. The company also expects a spike in costs as it introduces new labelling to meet new regulations. ($1 = 1.4896 Australian dollars) - Reuters
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