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New Image reports first-half loss as Malaysian sales fall

Friday 10th February 2012

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New Image, which makes colostrum-based health tonics, fell into the red in the first half after Malaysian pharmacies and retailers discounted the manufacturer’s drink powders, eroding sales.

The company made a loss of $157,000, or 8 cents per share, in the six months ended Dec. 31, compared to a profit of $1.9 million, or 1.14 cents per share, a year earlier, it said in a statement.

Revenue fell 5.4 percent to $35.2 million, while the cost of sales climbed 27 percent, squeezing the Auckland-based company’s margin. Earnings before interest, tax, depreciation and amortisation plunged 81 percent to $900,000.

“The popularity of the colostrum-based drink powder had led to pharmacies and retail outlets in Malaysia discounting the product to attract customers and that undermined the efforts of the group’s direct sales force,” the company said.

The result comes a week after New Image’s chief financial officer Simon Beuth announced he will step down from the company at the end of the month.

New Image booked a loss of $172,000 on its 50 percent stake in skin care products company Living Nature.

The manufacturer said other factors weighing on its underlying earnings were the costs of setting up a presence in Thailand and investigating opportunities in India, as well as rising head office costs as it builds an infant formula export business.

“There has been a concentrated focus on construction and commissioning trials at the group’s new multi-million dollar, purpose built, spray dried infant formula plant at Paerata, south of Auckland,” it said.

Its investment in upgrading technology and improving manufacturing capabilities “position it well for expanding revenue in the second half,” it said.

The company didn’t declare a dividend. It paid an interim dividend of 1 cent per share last year.

The stock was unchanged at 19 cents, valuing it at $44.6 million.


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