Hai-O net profit down on lower contribution from MLM business

PETALING JAYA: Wellness and multi-level marketing (MLM) company Hai-O Enterprise Bhd’s net profit fell 12% year-on-year (y-o-y) in its fourth quarter ended April 30, on the back of lower revenue contribution from its mainstay MLM business.

The company said in a filing with Bursa Malaysia that its earnings decreased to RM16.27mil in the final quarter compared with RM18.46mil a year earlier.

The 17.3% reduction in Hai-O’s MLM division revenue dragged down the group’s top line for the quarter by 6.72% y-o-y to RM110.65mil.

However, the stronger revenue contributions from Hai-O’s wholesale and retail divisions have partially offset the weaker performance of its MLM business.

On a positive note, for financial year 2018 (FY18), the group’s earnings surged 25.81% y-o-y to RM74.83mil.

The stronger bottom line was supported by the group’s higher overall revenue for the year.

Hai-O’s revenue in FY18 rose to RM461.78mil from RM404.24mil in the previous corresponding period.

“The increase in the group’s revenue was mainly contributed by all the three main divisions, namely, the wholesale, MLM and retail divisions,” it said in the filing.

Hai-O remained cautiously optimistic that the group would continue to be profitable in the next financial year.

“The MLM division will continue to carry out more new product development and plans to roll out a wider range of skincare and food supplements, in addition to the group’s efforts to penetrate into the fashion and lifestyle-related range of products.

“Besides this, the division will continue to widen its distributor base through the digital marketing platform.

“For the wholesale division, it will continue to carry out advertising and promotion programmes on its key products – Chinese medicated tonics – and it is targeting the younger generation to widen its customer base. It will continue to secure more new overseas agencies to widen its product base,” said the group.

As for its retail division, the company indicated that it was negotiating with a hypermarket operator to open concession counters.

Apart from that, the division is developing more new house-brand products to widen its portfolio and enhance its margins.

Hai-O announced a dividend of 11 sen for the fourth quarter of FY18. Earnings per share stood at 5.60 sen.