Natural Beauty Bio-tech profit leap defies sagging sales

Hong Kong, Macau and Malaysia added an ugly side to the books for skincare and spa services company Natural Beauty Bio-Technology in its latest results.

Covering greater China, the company had a slim increase of 0.2 per cent in its turnover for the year ended December 31, mainly dragged down by a 28.9 per cent drop in sales in Hong Kong, Macau and Malaysia. The HK$3.4 million (US$438,466) result contributed an insignificant 0.7 per cent of the group’s turnover of $506.9 million year-on-year (2014 yielded $505.8 million).

Overall gross profit margin edged up 1.5 points to 78.4 per cent thanks to an increased proportion of higher-margin products within the group’s sales mix, leading to the year’s profit leaping 91.4 per cent to $136.8 million, compared with H71.5 million the previous year.

Because of China’s economic slowdown, the group’s turnover in that market eased by 0.4 per cent to $418.5 million. However, through tightening up on franchisee management, turnover for the Taiwan market grew 5.4 per cent to $85 million.

Most of the group’s income is from its network of distribution channels, including spas and concession counters in department stores. As at year end, it had 1058 spas and 14 concessions. It closed 331 stores during the year, and opened 25.

Average per-store sales surged by 15.7 per cent to $421,000 for the year – including a 17.4 per cent hike in China and a 10.2 per cent rise in Taiwan.

The group says it puts significant emphasis on research and development, and during the year its flagship NB-1 products generated $229 million in sales, accounting for more than 45 per cent of total product sales. Several new NB-1 products were launched, including NB-1 Plus Firm Lift Extract, which had strong sales of $45 million.

“We will press on with our prudent growth strategy,” says COO and interim CEO Hsiao Wen-Chung. “We will encourage people to start their own business at NB, and focus on opening more stores in tier-three and tier-four cities in China.”

He says the group will launch more high-tech products and also introduce a skincare brand for plastic surgery recovery to the market in China.

“Riding on the rising awareness of personal well being among mainland consumers, we will drive the growth of food supplement products.”

Natural Beauty skincare, aroma-therapeutic and beauty products are distributed through a network of more than 1000 NB spas and dedicated counters in greater China.

You have 7 articles remaining. Unlock 15 free articles a month, it’s free.