August 29, 2017 / 12:12 AM / a year ago

UPDATE 1-Australia's Blackmores posts 41 pct full-year profit drop

* Net profit A$59.0 mln vs A$63.6 mln analyst f’casts

* Company slashes final dividend by 33 pct

* Result hurt by drop in ‘daigou’ sales

* Shares recover 5 pct in early trade (Adds CEO quote, revenue and sales detail, industry comparisons)

SYDNEY, Aug 29 (Reuters) - Australia’s top vitamin maker Blackmores Ltd reported a 41 percent plunge in full-year profit on Tuesday, as exports to China failed to make up for a precipitous drop in demand from Chinese shoppers in Australia.

The result fell just short of market expectations and the company slashed its final dividend by a third, as efforts to switch its focus away from Chinese shopping agents, or “daigou,” and chase direct exports instead, hurt sales.

Blackmores said net profit for the year to June 30 was A$59.0 million ($46.7 million), compared with A$100 million a year ago. That was below an average forecast for A$63.6 million, according to seven analysts polled by Thomson Reuters I/B/E/S.

The company had said only that the result would improve on the 2015 financial year, when it reported net profit of A$46.6 million. Blackmores shares, which have more than halved in value since early 2016, rose 5 percent to A$95.70 in early trade.

Daigou, who buy from stores across Australia to ship home to family and friends, dropped Blackmores’ products around April 2016, in response to regulatory changes and as the company began to target higher-margin direct sales.

“The decline in sales to Chinese consumers through Australian retail was significant and came without warning,” Blackmores said on Tuesday.

“The demand for Blackmores products in China remained strong throughout the year although the route to serve it has changed significantly,” outgoing Chief Executive Officer Christine Holgate added.

Blackmores said regulation, pricing and channel strategies “provide challenges”, but forecast year-on-year profit growth for the current financial year.

For fiscal 2017, Australian sales fell 23 percent to A$372 million, as Chinese buyers deserted the brand, and a 71 percent rise in direct exports to China to A$132 million was not enough to make up the shortfall. Overall revenue fell 3 percent to A$693 million.

The company cut its final dividend to A$1.40 from A$2.10 a year ago.

The result mirrors a plunge in sales at Bellamy’s Australia , which also chased direct exports to China ahead of domestic Chinese shoppers.

It contrasts with New Zealand-based a2 Milk Co Ltd , which posted a record profit last week and is widely viewed as having made the right bets with its China strategy, placing daigou at the centre of its distribution efforts. ($1 = 1.2631 Australian dollars) (Reporting by Tom Westbrook; Editing by Richard Pullin)

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