* Net profit A$28.5 mln, tracking below FY expectations
* Domestic sales down 31 pct
* Exports to China rise on shift in sales focus
* Chinese market is "complex and challenging" - exec
(Adds shares, background)
SYDNEY, Feb 22 Australian vitamin maker
Blackmores Ltd said on Wednesday that first-half net
profit plunged 41 percent, as a strategy to target exports to
China rather than Chinese shoppers in Australia backfired.
The company last year switched its sales focus away from
Chinese shopping agents, or "daigou," who buy products from
stores across Australia to ship home to family and friends, to
chase direct sales to China instead.
Analysts said the move, made partly in response to
regulatory changes in China, contributed to a 31 percent drop in
domestic sales. Direct exports to China almost doubled, but did
not make up the shortfall.
Net profit fell to A$28.5 million ($21.9 million) for the
six months to Dec. 31, on a slump in domestic sales. It follows
a record result a year ago, and tracks 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 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."
The one-time market darling suffered its biggest intraday
share price fall since reporting weak results last August,
touching a low of A$102.44 before rebounding slightly. The
broader Australian market traded flat.
Blackmores shares soared 500 percent in 2015, but have
halved since 2016 amid doubts about the China strategy.
The result mirrors a plunge in sales and stock price at
Bellamy's Australia, which also chased direct sales in
China ahead of domestic Chinese shoppers.
And it contrasts with Zealand dairy firm A2 Milk Company Ltd
, which stuck with the daigou channel and last week said
its half-year profits jumped nearly 300 percent.
Blackmores announced an interim dividend of A$1.30, lower
than A$2.00 a year ago.
($1 = 1.3033 Australian dollars)
(Reporting by Tom Westbrook; Editing by Stephen Coates)