Thai Ho Group Inc (太和生技集團) yesterday gave a positive outlook on sales this year, as growth momentum in the global market for beauty products is shifting from skincare to cosmetics and makeup, which is an area the research and development-focused company specializes in.
The firm, which is a supplier and strategic partner to four of the world’s top five cosmetic brands, said that the shift toward makeup products began last year and would continue for the next three years.
“We made the observation from product and restocking orders from our top clients, and the pace of growth is anticipated to continue accelerating markedly,” Thai Ho chief operating officer Michael Kuo (郭靖凱) said at a news conference in Taipei.
The company’s main clients include Boots Co PLC, Coty Inc and Tarte Cosmetics, as well as Revlon Inc and L’Oreal SA — which account for 74 percent of the company’s sales.
For this year, the company has secured orders to produce 38 new products for the brands, leading to anticipated sales growth of 15 to 20 percent, Kuo said.
The company’s greatest advantage lies in its development capabilities, and it has produced a library of more than 10,000 in-house formulations, Kuo said.
The library allows the firm to participate in joint product design efforts with major international brands, some of which have offered to market Thai Ho’s formulations as their own in exchange for cash to reimburse development costs, Kuo said.
However, the firm’s development costs are high in relation to other original design manufactures, at 7.69 percent and 6.72 percent of overall sales in 2015 and the first half of last year respectively, Kuo said.
In particular, local brands have posted rapid growth in the Chinese market, driven by higher demand for cosmetic products among the country’s younger consumers, Kuo said.
The company reported a net loss of NT$22 million (US$715,215), as of the end of the first half of last year, dragged down by non-operating losses and asset impairments, as well as unfavorable foreign-exchange movements.
Total sales last year rose 26.14 percent year-on-year to NT$1.19 billion, a record high, company data showed.
A turnaround in the second half is expected to bring last year’s annual operating results back into the black, Kuo said, adding that earnings would be helped by improving foreign-exchange movements in the second half.
“We were advised to book a number of asset impairment charges as part of preparations to advance to the main board of the Taipei Exchange from the preparatory Emerging Stock Board before the end of the year,” Kuo said.
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