This article first appeared in The Edge Financial Daily on September 27, 2018
KUALA LUMPUR: Hai-O Enterprise Bhd registered a reduced net profit of RM11 million for the first financial quarter ended July 31, 2018 (1QFY19), 38.5% lower than RM17.87 million a year ago, owing to lower multilevel marketing (MLM) and retail revenue.
Revenue fell 35.7% to RM80.08 million from RM124.54 million a year ago.
Although its wholesale division reported a 4% revenue increase — mainly contributed by higher sales from patented medicine — it was offset by the poorer performance in the MLM and retail divisions as revenue slumped 43.3% and 6.2% to RM58 million and RM 7.6 million, respectively.
Earnings per share slipped to 3.78 sen, compared to 6.17 sen in 1QFY18.
Hai-O said that the slowdown in business activities post-14th general election had impacted the MLM division as members turned more cautious in their spending; the pace of member recruitment also moderated.
Moreover, the division had absorbed a 6% rebate promotion on sales — carried out in May 2018 prior to the abolishment of the goods and services tax — of RM1.2 million, which coupled with higher marketing and branding costs for newly launched fashion and lifestyle products had further lowered the bottomline.
Looking ahead, Hai-O said its MLM division was exploring new market segments on the back of its newly introduced “Infinence” brand beauty and lifestyle-related range of products, and would also continue to embark on several marketing programmes, and create brand awareness through social media platforms and a series of advertising campaigns.
Hai-O expects to post higher sales in the next quarter when it conducts its half yearly members’ sales campaign.