SINGAPORE (Aug 7): Best World reported 2Q18 earnings dropped 23.7% to $9.13 million from $12.0 million in 2Q17.

This brings 1H18 earnings to $14.9 million, 31.3% lower than $21.7 million in 1H17.

Revenue for the quarter was 36.6% lower at $35.0 million from $55.3 million a year ago. This is in line with the group’s transition to the new Franchise Segment in China, resulting in lower Export revenue and delay in revenue recognition for the period.

The group’s Export segment dropped 82.4% to $4.48 million from $23.4 million in the previous year, as a result of strong demand in China during that period, where the group had to export certain SKUs which were in critically low supply to its agent in China.

Revenue from the Manufacturing/Wholesale segment also saw a 16.2% decrease y-o-y to $1.04 million.

This was partially offset by a 0.2% y-o-y increase in revenue from the group’s Direct Selling segment to $28.7 million and the recognition of prelude revenue from the group’s new Franchise segment of $0.84 million.

The Franchise segment is expected to replace the Export segment from 2H18 onwards.

Other operating income increased by 58.3% to $4.42 million compared to $2.79 million last year.

The group has declared an interim dividend of 1.2 cents per share, which will be payable on Sept 25.

Going forward, from 3Q18 onwards, the group expects the Franchise segment to become a significant contributor, while the Export segment will represent solely its exports to Myanmar.

Huang Ban Chin, executive director and CEO of Best World says, “1H2018 marks an important milestone for us as we completed the transition of the Group’s business model in China from Export segment to Franchise Segment. [This coupled] with expansion of our direct selling license from Hangzhou and beyond, we expect the China market to be the Group’s key growth driver going forward.”

Shares in Best World closed 2 cents higher at $1.26 on Tuesday.