SINGAPORE (May 9): Best World International reported 1Q17 earnings of $9.7 million, representing a 63.1% increase from the $6 million reported in the previous year on higher revenue.
Group revenue for the quarter grew 27% to $44.7 million from $35.2 million in 1Q16, mainly due to higher export sales to China as well as increased sales in Singapore and other markets such as Hong Kong and Korea, thus offsetting the lower sales recorded in Taiwan.
In particular, market demand for Best World’s DR’s Secret skincare range in China continued its growth, while the export segment more than doubled to $20.7 million over the quarter to represent 46.2% of the group’s total revenue.
Revenue contribution from Best World’s manufacturing/wholesale segment declined by 9.9% to $40.9 million as new product registrations have been held back by the management due to pending changes to product registration requirements.
Notably, revenue from the export segment is recognised at export price, and therefore generates a lower gross margin than the direct selling segment.
As a result of export segment’s increased contribution over the past few quarters including the current financial period, gross profit margin declined to 70.9% in 1Q17 from 75.5% in 1Q16.
Distribution costs however did not increase in line with the revenue growth as there were no commissions relating to export segment, therefore translating to a 2.2% decrease when compared to the same period last year.
Other operating income grew 26.9% on the back of higher service fees received from the group’s overseas export agent.
Administration expenses increased 26% to $8.9 million from $7.1 million in the previous year as a result of higher management and staff costs, as well as higher depreciation from Best World’s Tuas facility.
Over the quarter, the group’s income tax expenses increased by 43.2% to $2.5 million from $1.7 million in the previous year due to an increase in profit before tax recorded by the group.
Total membership as of March 31 increased 5.6% to 460,195 members as compared to Dec 31 last year.
Best World says it remains cautiously optimistic that China will be its key driver in the next reporting period, and for the next 12 months.
While having experienced “exceptional growth” over the last few years in Taiwan, the group’s management believes growth from the market will be more subdued in Fy17 as it prepares itself for the next phase of growth as “one of the top 10 direct selling companies in Taiwan”.
Shares of Best World closed 2 cents lower at $2.79 on Tuesday.
