Published February 13, 2009

Eu Yan Sang earnings surge 13% in Q2

By JOYCE HOOI

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EU Yan Sang International's net profit climbed 13 per cent for the second quarter of its fiscal year from a year ago despite losses from discontinued operations.

Mr Eu: Decision to exit from non-core businesses and to focus on core traditional Chinese medicine business is showing encouraging results

The mainboard-listed traditional Chinese medicine (TCM) retailer and wholesaler reported an increase in net profit attributable to equity-holders of $3.51 million, up from $3.11 million for the previous corresponding period. Including minority interests, net profit rose 11 per cent to $3.49 million.

Figures for the comparative period were restated due to the disposal of Red White and Pure Pte Ltd and its subsidiary's business and the liquidation of YourHealth Group Pty Ltd and its subsidiaries.

'Our decision to exit from non-core businesses and to focus on our core TCM business is showing encouraging results. We have improved our balance sheet and cash flow, which are important performance indicators for companies during the current financial turmoil,' said Richard Eu, the group's chief executive officer.

The group took a $1.19 million hit in the form of losses from discontinued operations as a result of their closure of the two businesses.

For the first half of FY2009 ended Dec 31, 2008, the group's net profit attributable to equity-holders rose 8 per cent from $6.29 million to $6.77 million.

Revenue for the group rose 6 per cent year-on-year in the second quarter, from $50.37 million to $53.43 million.

For the last six months ended Dec 31, revenue rose 2 per cent from $102.5 million to $103.81 million, year-on-year.

Retail revenue, which accounts for the largest portion of the group's turnover, rose 11 per cent during the quarter to $42 million compared with the same period last year.

Wholesale revenue, however, declined 19 per cent to $7.3 million due to lower exports to China which had been held up over the renewal of export licences.

'With our export licence to China having been approved this month, we expect contribution from export sales to China in the fourth quarter,' said Mr Eu.

The group will have its eye on operating costs as it braces for a challenging economic year.

'The one factor out of our control is rental cost. They have not gone down very much and by the time the leases come up for renewal, the rates might still not be as low as when we'd signed them three years ago,' said Mr Eu.

One priority it will not be skimping on is research and development, in a bid to meld traditional Chinese medicine with scientific rigour, which it believes will keep it out of the red for FY2009.

'We roll out about 10 to 20 products every year, and that rate is not going to fall.

'Our investments in a modern scientific approach towards TCM will provide us the pipeline to introduce new TCM and health food products and services. Barring unforeseen circumstances, we expect FY2009 to be profitable,' he added.

Earnings per share from continuing operations stood at 1.30 cents for the quarter and 2.21 cents for the financial first half-year, up from earnings per share of 0.93 cents and 2.17 cents for the same periods a year ago, respectively.