Lifestyle products group Osim International has been hit by another quarter of falling sales, just as chief executive (CEO) Ron Sim is embarking on a bid to take the firm private.
Osim, which operates in 23 countries, reported yesterday that first-quarter net profit took a 42 per cent dive to $7.8 million.
Revenue for the three months to March 31 dropped 8 per cent to $138.3 million, compared with the same period a year earlier.
The firm said sales across the core countries were affected "as markets remain soft and the challenge will be to maintain margins amid rising fixed-cost pressure".
Mr Sim launched the bid to take Osim private last month, with an initial offer of $1.32 per share that was later raised to $1.37.
On April 5, a number of Osim shares were "inadvertently" purchased at prices from $1.38 to $1.39, which were higher than the final offer of $1.37 then.
AT A GLANCE
NET PROFIT: $7.8 million (-42%)
REVENUE: $138.3 million (-8%)
Mr Sim has decided to compensate shareholders who sold their stock below the latest offer price, and this means he could be paying about $150,000. This was lauded by shareholders and market watchers.
The CEO's investment vehicle also raised the offer to $1.39 a share, given the error.
Home-grown Osim listed on the Singapore Exchange in July 2000, and is synonymous with massage chairs. It also distributes health supplements under the GNC and RichLife stores, and owns tea brand TWG.
The firm said Osim outlets were cut to 516 from 534 in the previous quarter, and GNC and RichLife to 194 stores, from 197, mainly from the exit of the Australian nutrition market. TWG Tea outlets number 52, "with a cautious approach to open new outlets for the year".
Osim invested $1.2 million to open new and upgrade existing outlets, for instance.
Earnings per share for the quarter was 1.06 cents, down from 1.75 cents last year. Net asset value was 51 cents as at March 31, unchanged from Dec 31 last year.
The firm said: "Due to prolonged soft market conditions, we will also adopt a cautious approach to investing for growth and continue to rationalise unprofitable stores.
"We remain cautiously optimistic on the prospects for the remainder of the year with new products, including uMagic, uInfinity Luxe, uDiva Classic and uPamper 2, to sustain our position in the market."
Osim shares closed half a cent lower at $1.39 yesterday.