Vitamins China E-News 1702

Date: 2017-03
Pages:25
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“Recommended article for Vitamins China E-News 1702:

Biostime completes 100% acquisition of Swisse

On 7 Feb., 2017, Biostime International Holding Limited (Biostime, stock code: 01112) announced that it had finished purchase of the remaining 17% shares in Swisse Wellness Group Pty. Ltd. (Swisse) for USD238.9 million (AUD311.1 million, AUD/USD exchange rate at 0.7675 on 23 Feb., 2017, sourced on hexun.com), following its purchase of an 83% stake for USD1.1 billion (AUD1.4 billion) in Sept. 2015.

Swisse is a leading brand of vitamins, herbal and mineral supplements in Australia, and has gained increasing popularity among Chinese consumers over the past few years. The merger of Swisse helps Biostime expand its product portfolio to adult nutrition and care products (mainly Swisse branded vitamins and healthcare products), and brings the company new source of profits.

Biostime’s H1 2016 financial report showed that, thanks to Swisse’s sales momentum in the Chinese market, its revenue surged by 53.3% to USD438.81 million (RMB3008.3 million). Particularly, the revenue derived from adult nutrition and care products rose by 34.9% YoY to USD187.3 million (RMB1284.0 million), making up 42.7% of the company’s total.

Conversely, Biostime’s well-known leading business, baby nutrition and care products, has suffered declined sales and profits in recent years. The company even issued a profit warning on 23 July, 2015, predicting a YoY decrease of 11.0% in H1 2015 revenue and 36.0% in corresponding net profit. Its financial report revealed that the H1 2016 revenue from this business fell by 12.2% YoY, mainly attributed to the decreased sales of mid-tier infant milk formula (IMF) products under ADiMILTM brand. Notably, Biostime鈥檚 share in the overall IMF market experienced a slight decrease to 5.8% for the twelve months ended 30 June, 2016 (vs. 5.9% for the year ended 31 Dec., 2015), according to Nielsen, an independent market research firm.

In light of the weakening profitability from IMF products and rising sales of Swisse, the company therefore accelerated its 100% acquisition of the brand to maximise its contribution to the consolidated financial statement. It is expected that Swisse will bring increasing profits to Biostime in the foreseeable future.”

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