Chlitina Holding Ltd (麗豐), which sells cosmetics under its own brand in China, yesterday said that it still maintained its target of posting a profit of NT$10 per share this year despite a declining gross margin and rising marketing costs last quarter.
The company’s earnings per share target can be translated into a net profit of NT$794.92 million (US$26.62 million) for this year, 14.67 percent higher than the NT$693.23 million it reported last year.
Last quarter, the company reported a profit of NT$176.06 million, up 10.13 percent year-on-year from NT$159.87 million and down 3.63 percent quarter-over-quarter from NT$182.7 million, while gross margin dropped to 79.9 percent last quarter from 81.9 percent a quarter ago and 83.65 percent a year ago.
Chlitina president and chief executive Richard Yu (余敬倫) attributed the lower gross margin to the company’s marketing campaigns for new health drinks with a gross margin of 78 percent.
In comparison, the firm’s skin care products have a gross margin of 82 percent, Yu said.
In a bid to enhance gross margin to 81 percent this year, the company plans to lower health drinks sales to 8 percent of its total revenue from 13.6 percent last quarter, he said.
Meanwhile, higher marketing costs of NT$267.42 million last quarter — up 55.13 percent annually — also dragged down operating margin last quarter to 25.67 percent from 36.16 percent the previous year, while gross margin fell to 24.73 percent last quarter from 26.46 percent the previous year, the company said.
Other expenditures booked last quarter included 4 million yuan (US$651,000) for creating a new image for its brand and 5 million yuan to take its retailers for a trip.
Overall, the company aims to post an operating margin of 30 percent and gross margin of 25 percent this year, Yu said. The company maintains its goal to post a 15 percent to 20 percent revenue increase this year from last year, he added.
Meanwhile, following Estee Lauder Cos Inc and Procter & Gamble Co, which sells SKII cosmetic products, Chlitina is also to launch its products online in China by the end of this quarter, Yu said.
The company is to sell its products on Tmall.com (天貓), Yu added.
“Estee Lauder Cos Inc started selling products on Tmall.com five months ago and it generated 10 million yuan a month online on average,” Yu said.
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