EUR 850.00 For Business Accounts Only

Morningstar | Blackmores Appoints New CEO With China FMCG Experience, AUD 105 FVE Unchanged

Narrow-moat Blackmores announced the appointment of Alastair Symington as CEO, effective October 2019, filling the vacancy after the departure of Richard Henfrey in February 2019. Importantly, Symington brings his experience in fast-moving consumer goods, or FMCG, in China, the key growth market for the Blackmores brand. With approximately one quarter of net sales directly from China and additional cross-border purchasing in Australia destined for China, the Chinese consumer and distribution channels are the crux of Blackmores' growth path.

Management stability and strategy certainty will be a positive since the previous CEO was only in the job for just over a year. An effect of the management turnover during the last few years has been changing models for distribution into China between informal Daigous, partnered ecommerce, and direct distribution and a physical presence. Given Symington’s experience with large FMCG players such as Coty, Nestle and Proctor & Gamble including cross-border ecommerce, we expect him to bring clarity and execution know-how to Blackmores’ strategy. We retain our forecast revenue growth of 6.9% for the five years to fiscal 2023 and the appointment of Symington solidifies our revenue growth expectations.

We retain our fair value estimate for Blackmores at AUD 105 and await fiscal 2019 results, due to be reported on 15 August 2019. At the current market price, shares screen as slightly undervalued. We expect any changes in strategy to be announced in 2020 once the new CEO has settled into the role.