Its multi level marketing sales and profitability took a plunge in 2011 financial year, mainly due to slower membership growth after the company tightened its rules and procedures relating to purchasing and other documentation in order to comply with industry regulations introduced in 2010.
Consequently, MLM FY2011 sales and Ebit plummeted rm125.5 million and rm22.3 million respectively, from rm418.1 million and rm75.3 million in FY2010. It has since adopted more proactive measures to attract new members/distributors and improve its performance.
The company also shifted its focus from big ticket items such as water filters, to consumer centric products like beauty and health products, sales of which have been largely consistent and recurring.
As Hai-O has 140000 registered members, of which about 80% are bumi, it is planning to introduce new products that appeal to non bumi users in order to capture the relatively untouched market. The company will soon continue to launch five to right new products each year.
It has been paying out more than 50% of its net profit as dividends over the past five years.
In view of better sales and fatter margins coming from MLM segment, its FY2014 and FY2015 earnings be nudged up.
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