Eu Yan Sang, the retailer of Traditional Chinese Medicine, has swung into losses in the fourth quarter, due the challenging macro-economic environment in Hong Kong and Malaysia, it says.
For the three months to June, the group made a loss of $3.6 million. A year ago, it had reported earnings of $1.6 million. Revenue fell 15% to $72.3 million. For the full year, earnings fell 70% to $4.6 million from a year ago as revenue fell 4% to $350.4 million.
Gross margins for the 4Q and full year came in at 49%, lower than the previous corresponding quarter's gross margin of 52% and last year's gross margin of 50%. This was mainly due to the impact of product sales mix and promotions.
Eu Yan Sang said the 4Q operating loss was primarily due to the decline in revenue. This was partially cushioned by lower spending on administrative expenses.
Operating profit for the full year was below last year as a result of the dip in revenue and increase in distribution and selling expenses. The increase in expenses was mainly due to operating costs from the increase in company-operated outlets.
In terms of geographical performance, the dip in revenue from Hong Kong and Malaysia but partially offset by revenue growth in Australia and Singapore.
“Travel restrictions to Hong Kong imposed on Mainland Chinese have affected parallel traders coming to Hong Kong to purchase Eu Yan Sang products,” it said.
Looking ahead, Eu Yan Sang says it remains cautious on its business outlook as macro-environmental issues and challenges in Hong Kong and Malaysia will continue to persist.
Store rationalisation will also continue in China as the group focuses on online and wholesale channels.
Meanwhile, operations in Australia are on track to show a turnaround by FY16 through double-digit same-store sales growth.
The group has declared a final dividend of 0.5 cents.
Eu Yan Sang closed 1.2% higher at 41.5 cents on Tuesday.
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For the three months to June, the group made a loss of $3.6 million. A year ago, it had reported earnings of $1.6 million. Revenue fell 15% to $72.3 million. For the full year, earnings fell 70% to $4.6 million from a year ago as revenue fell 4% to $350.4 million.
Gross margins for the 4Q and full year came in at 49%, lower than the previous corresponding quarter's gross margin of 52% and last year's gross margin of 50%. This was mainly due to the impact of product sales mix and promotions.
Eu Yan Sang said the 4Q operating loss was primarily due to the decline in revenue. This was partially cushioned by lower spending on administrative expenses.
Operating profit for the full year was below last year as a result of the dip in revenue and increase in distribution and selling expenses. The increase in expenses was mainly due to operating costs from the increase in company-operated outlets.
In terms of geographical performance, the dip in revenue from Hong Kong and Malaysia but partially offset by revenue growth in Australia and Singapore.
“Travel restrictions to Hong Kong imposed on Mainland Chinese have affected parallel traders coming to Hong Kong to purchase Eu Yan Sang products,” it said.
Looking ahead, Eu Yan Sang says it remains cautious on its business outlook as macro-environmental issues and challenges in Hong Kong and Malaysia will continue to persist.
Store rationalisation will also continue in China as the group focuses on online and wholesale channels.
Meanwhile, operations in Australia are on track to show a turnaround by FY16 through double-digit same-store sales growth.
The group has declared a final dividend of 0.5 cents.
Eu Yan Sang closed 1.2% higher at 41.5 cents on Tuesday.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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