The Straits Times / The Business Times News on OSIM

OSIM suffers first quarterly net loss in six years

MASSAGE chair maker OSIM International has requested a half-day trading halt today, after reporting its first quarterly net loss since listing six years ago.

Despite higher revenue for the three months to Sept 30, it swung into the red - from a net quarterly profit of $10.4 million a year ago to losses of $9.8 million.

OSIM asked the Singapore Exchange for a share-trading halt to 'allow the market sufficient time to digest the news, so that there is minimum knee-jerk reaction', said chief financial officer Peter Lee.

The quarterly setback sent OSIM's net earnings in the nine months to Sept 30 plunging 87.3 per cent, to $3.9 million, despite sales rising by 35 per cent to a record $477.3 million.

The healthy lifestyle products maker attributed the quarterly result to the fallout from bad publicity surrounding 'copycat products' from rivals in China.

Mr Lee said the results were a 'blip' as 'the main factor for the third quarter fall is due to negative publicity in China, where copycat traders have made unsubstantiated claims about their products'.

He added that imitators' claims led to the Chinese government banning these companies from advertising on direct response TV channels from August.

'Of course, OSIM does not advertise on these channels, but suffered from the general market sentiment as a result of that,' said Mr Lee.

The negative sentiment spilt over to its two other North Asian markets of Hong Kong and Taiwan, reducing the region's third-quarter sales by 5 per cent.

Sales in other regions lifted overall turnover by around 4 per cent to $138.7 million.

Third-quarter loss per share was 1.82 cents, from earnings per share of 1.94 cents a year ago.

The group's net asset value per share stood at 27 cents, down from 36 cents at the end of last year.

OSIM's performance for the first nine months also took a hit from losses incurred by Brookstone, the American specialty retailer it acquired last October.

'We are into our third quarter in the first year of making a major acquisition,' Mr Lee said.

OSIM also sought a trading halt for its first-quarter results announcement earlier, when its net profits fell 95 per cent.

Historically, Brookstone incurs losses in the first three quarters, but reaps 'almost all its profits in the fourth quarter' during the Christmas period, said Mr Lee.

Barring unforeseen circumstances, OSIM expects its full- year revenue and net profit to outdo last year's figures.

OSIM shares closed at $1.93 yesterday, down 10 cents.