Best World posts 7.1% drop in Q4 profit, no dividend proposed
Ry-Anne Lim
SKINCARE products firm Best World International reported early on Sunday (Feb 26) a net profit of S$47.7 million for the fourth quarter ended Dec 31, 2022, down 7.1 per cent from S$51.3 million in the previous corresponding period.
No dividend was declared for the period under review. The group said this takes into account its “short and medium term commitment”, including working capital requirements, capital needed for corporate actions and the current uncertain business climate.
The result comes despite a 14.6 per cent increase in revenue to S$211 million, from S$184.1 million the previous year.
Earnings per share also went up 15.3 per cent year on year to 10.87 Singapore cents for the quarter.
The group highlighted that the growth in revenue was bolstered by stronger performance in its China, Taiwan and Hong Kong markets – largely due to a resumption of marketing events and activities in these areas as travel restrictions eased post-pandemic.
This had offset a decline in revenue in other areas, which include Singapore, Malaysia and Australia, said the mainboard-listed company.
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Gross profit margin also declined to 78.4 per cent in Q4 2022, primarily from price promotion on certain products in its China market, as well as an increase in the cost of production for raw materials and higher manufacturing costs.
The group also incurred a loss of S$22.9 million from the impairment of an investment in a joint venture in the UK and foreign currency losses
For the full-year FY2022, revenue dipped 3.9 per cent year on year to S$557.3 million, while profit fell 11.3 per cent to S$136.3 million. This works out to earnings per share of 28.82 Singapore cents for the entire fiscal year.
Best World believes that the road ahead will remain rocky.
Despite the lifting of pandemic restrictions in China – one of its key markets – the group said there are still “severe disruptions to the economy” and people have become “very rational in their consumption habits”.
Performance in China is therefore predicted to remain challenging before any rebound for growth, it said.
“The group’s other key markets also expect strong headwinds in light of a looming US recession and weakening global demand as a result of tense US-China relations and the ongoing Russia/Ukraine war.”
Other future challenges include shipment issues such as port congestion, which might result in short term inventory shortages; professional fees relating to merger and acquisitions and other corporate actions; higher administrative costs, especially for the relocation and refurbishment of the group’s headquarters and some regional centres; as well as fluctuating currency exchange rates.
Shares for Best World closed on Friday at S$2.29, down 0.9 per cent or S$0.02, before the news.
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