In the midst of a privatisation bid by its founder Ron Sim, Hong Kong lifestyle products group Osim International has reported weak earnings for the first quarter.

Sales sagged in its core markets with cost pressures hitting margins and dimming prospects of the stock exceeding the value of Sim’s S$1.39 (US$1.04) offer price, reports the Business Times.

Net profit for the three months ended March 31 plunged 42 per cent from the same period last year to $7.84 million, the group says in a Singapore Exchange filing. That works out as earnings of 1.06c a share, down from 1.75c.

Year-on-year, there has been a 7.7 per cent drop in revenue to $138.3 million, with the group attributing this mainly to an overall weaker environment.

“Markets remain soft and the challenge will be to maintain margins amid rising fixed-cost pressure,” says the group. In the face of prolonged soft market conditions, it will adopt a cautious approach to investment for growth while continuing to rationalise unprofitable stores.

Sim’s bid to privatise Osim has caused confusion in the market, at one point leading to a halt in share trading in the group.