The Straits Times / The Business Times News on OSIM

OSIM profit dives 95% partly on US losses

NET profits at massage chair maker OSIM International plunged 95 per cent in the first quarter to $430,000, despite sales shooting up 79 per cent to a record $155.2 million.

The drop in earnings, down from $8.1 million a year ago, was partly attributed to losses sustained by Brookstone, a United States-based speciality retailer that OSIM acquired last year.

The losses were magnified by finance costs involved in the acquisition and resulted in OSIM incurring a net loss of $13.9 million from its associates and joint ventures.

Excluding this loss, OSIM net earnings almost doubled to $14.4 million for the three months to March 31, the company said in a statement yesterday.

But OSIM chief executive (CEO) Ron Sim remained optimistic about Brookstone's prospects, saying the retailer 'typically incurs losses in the first three quarters of the year but makes a sufficiently large profit in the fourth quarter to result in full-year profitability'.

Adding that Brookstone 'is not so sales-oriented and relies mainly on fourth-quarter Christmas sales', he said OSIM's immediate goal is to enhance year-round sales at Brookstone and produce quarterly profitability from the retailer starting the next quarter.

To that end, OSIM last week replaced Brookstone CEO Michael Anthony with Mr Lou Mancini, the former president and CEO of General Nutrition Centers, the largest global speciality retailer of nutritional supplements.

'We were not satisfied with the progress of some changes and we felt that it was very much a leadership issue,' Mr Sim said.

For the first quarter, earnings per share for OSIM dived to 0.1 cent from 1.8 cents a year ago, while net asset value per share slid to 33 cents as at March 31 from 36 cents as at Dec 31.

The group, which has opened 48 more OSIM outlets since the first quarter of last year, expects sales and earnings for this year to exceed those of last year.

It plans to launch up to 20 new products this year, Mr Sim said.