Amway Q3 revenue halved on higher incentive provisions

PETALING JAYA: Amway (Malaysia) Holdings Bhd’s net profit for the third quarter ended Sept 30, 2015 fell 52.9% to RM11.78 million from RM25.02 million a year ago due to adjustments made to reflect higher incentive provisions as a result of higher sales.
Its revenue was 10.3% higher at RM241.68 million in the third quarter compared with RM219.12 million in the previous year due primarily to continuous strong momentum coupled with the successful launch of BodyKey, the Nutrilite personalised weight management programme in September 2015.
For the nine months period, net profit dropped 23.2% to RM58.85 million from RM76.62 million a year ago due mainly to higher import costs (primarily caused by a weaker ringgit and transfer price impacts), as well as product mix impacts and higher sales incentive provisions driven by higher sales.
“These impacts were partially offset by the higher sales,” Amway said in a filing with the stock exchange.
Its revenue increased by 20.1% to RM751.65 million compared with RM625.93 million due mainly to a strong buy up in the first quarter of 2015 ahead of Goods and Services Tax (GST) implementation as well as the successful launch of BodyKey.
It declared a third interim single tier dividend of 10 sen net per share in respect of the financial year ending Dec 31, 2015.
On its prospects, Amway said the various sales and marketing initiatives together with the successful launch of BodyKey to support Amway business owners to grow their business have more than compensated the much anticipated demand adjustment post-GST.
It said the strong revenue trend is expected to continue into the fourth quarter.
“However, the higher cost of import and sales and marketing promotion costs together with less favourable sales mix continue to have an adverse impact on operating margin,” Amway said.