Vitamin maker Blackmores' full year profit has tumbled as regulatory rumours dampened demand from Chinese consumers in Australia.
Chief executive Richard Henfrey said talk of potential changes to China's e-commerce regulations and "the suitcase trade" had impacted the buying patterns of Chinese entrepreneurs and tourists who were previously purchasing products in Australian stores and taking them back home.
The reduction was significant and came without warning, the company said, particularly in the first quarter of the financial year, and dragged full year profit for 2016/17 down 41 per cent to $59 million.
Blackmores made a record profit of $100 million in 2015/16 and estimated that more than $200 million of its total $717 million revenue came from Chinese consumers as visitors took products home.
Mr Henfrey, who replaced Australia Post-bound Christine Holgate less than two weeks ago, said regulatory changes never came about, but rumours about them created a great deal of uncertainty in the market.
"Those Australian-Chinese consumers stopped buying at that point of time and we have worked pretty hard to recover from that," Mr Henfrey told AAP on Tuesday.
Full year revenue from ordinary activities fell three per cent to $693 million, with the bulk of sales coming from the company's Australian and New Zealand arm, despite a 23 per cent drop compared to a year ago.
Excluding the impact of Chinese influenced sales, branded domestic sales were in line with the prior year.
Asia direct sales rose 36 per cent to $216 million, amid growing demand for products in China, where direct sales grew 71 per cent to $132 million.
Blackmores' BioCeuticals Group, which includes the BioCeuticals and Global Therapeutics brands, also lifted its sales, to $102 million.
The vitamin maker said it had increased its inventory provisions from $2 million to $14 million to protect against possible future uncertainty, which had impacted earnings by around $10 million for the full year.
It said it expects regulation, pricing and evolving market conditions to continue to provide challenges in the year ahead but, notwithstanding these challenges, believes its Asia division, particularly China, will strengthen.
Blackmores shares gained $6.82, or 7.5 per cent, to $97.99.
AUST SALES SLUMP HITS BLACKMORES PROFIT:
* Full year net profit down 41pct to $59m
* Revenue down 3pt to $692.8m
* Final dividend down 70 cents to $1.40, fully franked
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