Amway Q2 net profit down 39.6%

PETALING JAYA: Amway (Malaysia) Holdings Bhd’s net profit for the second quarter ended June 30, 2016 fell 39.6% to RM6.18 million from RM10.23 million a year ago due to higher import costs from the weaker ringgit and higher product prices, and increase in sales incentive provisions.

Group revenue was 43.0% higher at RM268.87 million in Q2 compared to RM187.99 million in the same period in 2015 as sales exhaled following a strong buy-up in Q1’15 ahead of the implementation of the Goods and Services Tax (GST) on April 1 2015.

Sales for the quarter under review were driven by strong Amway Business Owner (ABO) momentum and higher ABO qualifiers in response to the company’s 40th anniversary sales and marketing programmes, activities and promotions.

For the half year, its net profit fell 48.5% to RM24.23 million from RM47.07 million in the previous year’s corresponding period mainly due to higher import costs, as well as higher sales incentive provisions driven by sales and marketing programme and activities to commemorate its 40th anniversary.

Group revenue for the six months ended June 30, 2016 increased by 12.7% to RM574.81 million from RM509.97 million over the same period in 2015 due to stronger buy up ahead of the price increases effective February and April 2016. Sales were also driven by positive ABO momentum and higher ABO qualifiers in response to the 40th anniversary programmes.

A second interim single tier dividend of 5 sen net per share has been declared on Aug 17, 2016 and will be paid on Sept 15, 2016 to shareholders.

On its prospects, Amway said the strong first-half performance was a result of the pre-price increase buy-up. Therefore, coupled with the continued weak consumer sentiments, it foresees the second-half performance will be softer than the first.

“Despite the anticipated second-half environment, we will continue to invest in sales and marketing programmes and ABO experience related infrastructure. This, together with the higher foreign exchange rate for product importation cost compared to the previous year, will have negative impact on our operating margin,” it said.