Highlight Zhulian’s net profit plunge 78% in 2Q on shrinking demand

by **Cals** Thu 17 Jul 2014, 04:55

Highlight Zhulian’s net profit plunge 78% in 2Q on shrinking demand

Business & Markets 2014

Written by Levina Lim of theedgemalaysia.com

Wednesday, 16 July 2014 19:13

KUALA LUMPUR (July 16): Zhulian Corp Bhd posted net profit of RM8.27 million, for the second quarter ended May 31, slightly more than one quarter of RM37.9 million achieved a year ago, no thanks to lower demand locally and abroad.

The multi-level marketing company’s revenue shed 38% to RM65.6 million.

It said in a filing with Bursa Malaysia today that the decrease in revenue for FY14 was mainly due to a fall in both “local and overseas market demands”. Pre-tax profit declined to RM32.1 million as a result, in line with the drop in revenue and share of profit of accounted investee.

Despite the poorer performance, Zhulian announced a second interim single tier dividend of 3 sen per ordinary share of 50 sen each, totalling RM13.8 million.

For the six-month period ended May 31, the accumulative net profit fell 62.4% to RM25.4 million, from RM67.7 million in the previous corresponding period. Revenue was 38.7% lower at RM131.8 million, from RM215 million.

Zhulian is in the business of manufacturing and sale of costume jewellery and consumer products on a direct sales basis.

“The outlook of the current year remains challenging, in the midst of stiff market competition and economic uncertainty, which will likely cause an impact on consumer confidence on spending.

“On the other hand, riding on the uptrend of export revenue of the Group seen in the current quarter, we expect that the market situation will be improved, in line with more intense marketing efforts to boost the productivity of distributors,” it said.

According to Zhulian, it is taking prudent measures in evaluating various initiatives and opportunities to ensure its business continues to attract new distributors, as well as retaining existing distributors by increasing the effectiveness of its R&D effort in developing new products, introducing more promotional campaigns and improving the quality of our customer service.

“Furthermore, the group will also continue to explore opportunities of tapping into new market segments, through introduction of new products and venturing into new business segments.

“Barring unforeseen circumstances, the board of directors remains cautiously optimistic of the group's performance for FY2014,” it added.