SINGAPORE (Nov 8): Direct-seller Best World International has announced a 36.4% rise in earnings of $12.2 million for the three months ended Sept, up from $8.9 million a year ago on lower expenses.
Revenue for 3Q17 came in 10.3% lower at $46.8 million compared to $52.2 million in the previous year, due to lower contribution from Taiwan and on the back of sustained export growth to China.
Segment-wise, revenue from Direct Selling declined 37% from that of the same quarter last year, primarily due to the decline in revenue from the group’s key market of Taiwan – while revenue for Export Segment in 3Q17 increased to 54% of the group’s total revenue as compared to 35.8% for the same period last year.
The group’s Manufacturing/Wholesale segment maintained a revenue of $1.1 million over the quarter.
As the Export segment makes up more of the group’s revenue in the latest quarter at 54% of total revenue, gross profit margin declined to 67.2% compared to the same period a year ago due to the Export’s lower gross profit margin compared to the Direct Selling segment, which comprises 43.7% of total revenue.
Other operating income grew 12% to $1.2 million from $1 million in 3Q16 due to higher service fees received from the group’s overseas export agent in the latest quarter.
In line with the lower revenue contribution from Taiwan, distribution costs fell 45.6% to $7.5 million from $13.7 million a year ago. These comprise freelance commissions and other sales-related expenses, while the Export segment does not incur any commissions for the group.
Meantime, administrative expenses for the quarter fell 24.2% to $8.2 million from $10.8 million a year ago as a result of lower professional fees incurred during the quarter.
The lower expenses were offset in part by finance costs which more than doubled to $0.5 million from $0.2 million in the previous year, due to bank borrowings related to the group’s Tuas facility drawn down since 3Q16.
Best World’s management remains cautiously optimistic of its profitability for the next reporting period, and for FY17 – and that the decline in demand in Taiwan’s market will be sufficiently buffered by the growth of its Export segment as the China consumer market continues to display a growing appetite and demand for the group’s skincare brand, DR’s Secret.
Adding that its effort to expand the geographical coverage of its direct selling license beyond Hangzhou to include other cities is proceeding as planned, Best World says its expansion application has already commenced and shall include key cities of at least 7 provinces to be approved by the end of FY18.
Shares in Best World closed 2 cents higher at $1.42 on Wednesday.
