New Image annual profit falls 68%, no final dividend
Aug. 26 (BusinessDesk) - Health supplements company New Image Ltd. said annual net profit fell 68% to $2.3 million as costs associated with developing new markets and impairment charges impacted on its bottom line.
The company won't pay a final dividend “as a result of investment required for new market growth initiatives and capital expenditure projects” after paying a 1 cent first-half dividend. It paid 1.5 cents per share in dividends the previous year.
Sales fell 7% to $75.8 million for the year ended June 30, reflecting a 35.8% drop in Malaysian sales to $22.7 million while Taiwan sales rose 4.6% to $34 million, the two countries accounting for about 90% of the company's direct sales and about 74% of total revenue.
New Image said Malaysian sales appear to have stabilised.
“New initiatives to invigorate existing distributors and bring in new distributors, including weekly commission payments and the recent launch of Alpha Lipid Sleep Time, are being implemented,” the company said.
It said discounting in retail has continued and significantly impacted on revenue. “A solution using new 2D bar coding technology, together with tamper-proof packaging, will allow product found in retail to be traced back to the offending distributor so action can be taken,” it said.
New Image restructured its retail/wholesale division last year and, together with further investment this year, that has helped deliver increased revenues of $13.1 million, up 86.3% on prior year.
It bought just over 50% of natural skin car company Living Nature during the year and work has already been completed on a second generation of Bio Re-juv skin care products for the company's direct selling division and these will be launched in Taiwan and Malaysia in the first half of 20120, the company said.
It will take operating control of Living Nature in the current year and expects cost cutting and the strengthening of its sales base will bring it into profit. The latest result included an equity accounted $753,000 loss from Living Nature whose results will be consolidated from now on.
The company said it expects a lift in revenues from the direct selling business from new country market opportunities, the launch of new products and organic growth in Taiwan and Malaysia. It also expects the retail/wholesale division to grow and to improve its margins.
New Image shares last traded yesterday at 23 cents. The shares have been trending lower since peaking at 83 cents in August 2009.