The Straits Times / The Business Times News on OSIM

OSIM's decline continues with $17m loss

OSIM International's woes have deepened with the lifestyle group reporting a first-quarter loss of $17.3 million.

The result is a sharp reverse from the profit of $430,000 recorded in the same period last year, and is far worse than the $9.8 million of red ink in last year's third quarter.

Revenue for the three months ended March 31 fell 22 per cent to $121.3 million, compared with $155.2 million for the period last year.

Founder and chief executive Ron Sim, who attributed the loss to a time of market consolidation, said: 'We are not satisfied with the results.'

Product sales in China had been affected by negative publicity last year as imitators of its best-selling uZap body trimmer did 'crazy advertising' with unsubstantiated performance claims.

The Chinese authorities intervened in August to ban the TV advertisements of the imitations.

Another key factor in the poor showing can be traced back to its United States subsidiary Brookstone. The unit, which is 55.5 per cent owned by OSIM, lost US$11.17 million (S$16.93 million) for the quarter.

Brookstone has traditionally incurred losses in the first three quarters, but offsets those with a significant profit in the fourth quarter around Christmas.

While the company expects this year to be the same, there is a danger of Brookstone underperforming in the fourth quarter and doing further damage to Osim's balance sheet.

The loss per share was 3.19 cents, a significant fall from earnings per share of 0.08 cent for the corresponding period last year.

Net asset value at the massage chair maker was 28 cents per share as at March 31, down five cents from the same period last year.

OSIM bosses put up a brave front at the results briefing yesterday. Mr Sim said: 'OSIM's core business, after 18 years of growth and six years of initial public offering growth, is going through a consolidation.

'There's a time where a correction will have to take place so that you will continue to grow.'

He said the group will reinforce its core business by introducing new products through innovation, strengthening its brand name and opening more outlets globally.

Acknowledging that the consolidation was 'taking a longer time' than expected, chief financial officer Peter Lee said: 'We don't see the momentum coming back immediately.'

Mr Sim added: 'We are the pioneers of this industry and we see good growth prospects once the industry consolidation is over. There is a strong pipeline of innovative products and a clear strategy.

'We will emerge stronger as we extend our global reach as the market leader.'