SINGAPORE (Feb 26): Best World International, the direct seller of skincare and wellness products, has reported earnings of $21.8 million for the 4Q ended Dec 2017, up 77.2% from $12.3 million in 4Q16 on higher revenue.
Revenue for the quarter grew 19.8% to $74.1 million from $61.8 million previously on the back of higher export contributions, which more than doubled to $35.1 million from $14.3 million a year ago as a result of growing market demand for the group’s DR’s Secret skincare line in China.
This was further supported by the long Chinese New Year holidays in February, which led to Best World’s China export agent placing orders for the next 3-6 months over 4Q.
The higher revenue contributions from the group’s export segment helped to offset an 18% decline revenue from the direct selling segment due to a decline in the group’s market of Taiwan and Singapore, which offset an improvement in revenue from Indonesia and other markets.
Revenue contributions from the manufacturing and wholesale segment, which makes up 1.8% of the group’s total revenue for 4Q, fell 14.6% to $1.4 million from $1.6 million previously.
As at end Dec 2017, total membership for the group’s Direct Selling business grew 2.2% to 490,041 members from that of end-Sept 2017, out of which active distributors – members who have received commission over the last 12 months – stands at 8.7% of total membership.
The latest quarter’s result brings Best World’s earnings for the full year to $55.7 million, up 61% from $34.6 million in FY16.
In terms of geographical locations, Best World notes overall revenue growth from Singapore over the full year, and attributes this to positive responses from the market campaigns it conducted during the earlier quarters of the year, which increased in an increase of new members.
The group says it intends to engage new and existing members in this market by implementing marketing activities network building as well as launching new products in the coming quarters to continue the Singapore market’s steady growth momentum.
While Best World remains optimistic that the China market will continue to contribute positively to the group, it attributes the lower revenue from its Taiwan market to changes in strategies implemented since early FY17, coupled with stiff market competition as well as frequent online discounting.
As for its Indonesia market, which saw a marginal decrease due to negative exchange rate movements over FY17, the group says its management’s implementation of strategy has resulted in a gain in momentum over 2H, which is evident in the 10.7% increase in revenue to $1.7 million for 4Q.
A final dividend of 2.6 cents per share has been declared for the period under review.
Looking ahead, Best World says it expects higher administrative expenses to be incurred due to an increase in management and staff to cater to its business growth, along with additional fees and expenses to be incurred from the recent opening of its Tuas manufacturing facility.
The group is in the midst of converting its export business in full to that of direct selling, and says higher revenue and gross profit, a decline in other operating income, and an increase in distribution expenses due to commissions paid to distributors, may be incurred as a result.
Meanwhile, Best World says its efforts to widen the coverage of its direct selling license beyond Hangzhou to include other cities in China is proceeding is planned, and that it expects its expansion application to cover key cities of at least seven provinces to be approved by end-FY18.
Its management also intends to undertake measures to mitigate any currency risks which the group may be exposed to.
Shares in Best World closed 1 cent higher at $1.37 on Monday.
