Friday 29 Mar 2024
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KUALA LUMPUR(Sept 26): 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 multi-level 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 RM7.6 million, respectively.

Earnings per share slipped to 3.78 sen, compared to 6.17 sen in 1QFY18.

In a bourse filing, Hai-O said the slowdown in business activities post the 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.

The wholesale division will expand its neighbourhood medical halls network and continue to promote its premium Chinese medicated tonics and expand into non-alcoholic products to target younger consumers.

Hai-O expects to post higher sales in the next quarter when it conducts its half yearly members' sales campaign.

Hai-O shares settled 3 sen or 0.75% higher at RM4.04 for a market capitalisation of RM1.17 billion.

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