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UPDATE 1-Australia's Blackmores posts 41 pct half-year profit plunge

Published 22/02/2017, 09:48 am
© Reuters.  UPDATE 1-Australia's Blackmores posts 41 pct half-year profit plunge
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(Adds CEO quote, context of company strategy)

SYDNEY, Feb 22 (Reuters) - Australian vitamin maker Blackmores Ltd BKL.AX said on Wednesday that first-half net profit fell 41 percent as demand from Chinese shoppers in Australia slumped.

Net profit fell to A$28.5 million ($21.9 million) for the six months to Dec. 31, tracking well behind an average forecast from seven analysts polled by Thomson Reuters I/B/E/S for full-year profit of A$75.8 million.

The company last year switched its sales focus away from Chinese shopping agents, or "daigou," who buy products from stores across Australia to ship back home to family and friends, to chase direct sales instead.

But the move, made partly in response to regulatory changes in China, seems to have backfired, as domestic sales dropped 31 percent - and while direct exports to China almost doubled, it did not make up the shortfall.

"The first quarter was impacted by changes to the buying patterns of Chinese exporters," Blackmores Chief Executive Officer Christine Holgate said in a statement.

"The Chinese market is both complex and challenging, though it remains a very important part of our business and we are pleased with our growth."

Blackmores had forecast falling profits in August, and posted a weak quarterly result in October, but delivered the modest improvement in the second quarter that the company had expected. The company announced an interim dividend of A$1.30, lower than A$2.00 a year ago.

The result mirrors a plunge in sales, and stock price, at Bellamy's Australia BAL.AX , which also chased direct sales in China ahead of domestic Chinese shoppers.

And it contrasts with Zealand dairy firm A2 Milk Company Ltd ATM.NZ , which stuck with the daigou channel and last week said its half-year profits jumped nearly 300 percent.

($1 = 1.3033 Australian dollars)

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