Lower provisions and spending lift Amway earnings by 139% y-o-y

This article first appeared in The Edge Financial Daily, on August 24, 2017.
Lower provisions and spending lift Amway earnings by 139% y-o-y
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KUALA LUMPUR: Amway (M) Holdings Bhd’s net profit for the second quarter ended June 30, 2017 (2QFY17) jumped 139% year-on-year (y-o-y) from RM6.18 million to RM14.77 million, led by lower incentive provisions and operating expenses.

The favourable impact of those was partially offset by lower sales and higher import costs, it said. Quarterly revenue shrank 6% y-o-y to RM252.06 million from RM268.87 million, its Bursa Malaysia filing showed.

It declared a second interim dividend of five sen net per share, payable on Sept 27.

Amway said the lower quarterly revenue was due to a higher base stemming from its Amway Business Owner sales last year in response to the company’s 40th anniversary, as well as a stronger buy-up prior to its price hike in April that year.

Its cumulative net profit for the first half of FY17 was flat at RM24.22 million, compared with RM24.23 million a year ago, while revenue shrank 15% to RM489.21 million from RM574.81 million.

Moving forward, Amway is cautious about its operating environment remaining challenging due to weak consumer sentiment, while foreign exchange may continue to erode its margins.