BYHEALTH reported a decline in its revenue on all three fronts across its online and offline domestic business, as well as its overseas markets.
Total revenue dropped 17.56 per cent to RMB$4.61bn (US$645.42m), the company said in its half year report released on August 6.
Net profit attributable to shareholders also fell by 42.34 per cent to RMB$891.03m (US$124.66m).
Although China’s e-commerce market is booming, the company said its online revenue in the domestic market had shrunk 22.15 per cent to RMB$727.54m (US$101.79m).
Aside from Tmall, JD and VIP, the company said it was also active on various platforms such as Douyin and Kuaishou, where its flagship product BYHEALTH protein powder, collagen, multivitamins, and other products from its power brands Keylid were sold.
Its domestic offline and overseas revenue were also down 16.67 per cent and 20.28 per cent respectively to RMB$2.48bn (US$346.51m) and RMB$360.59m (US$50.45m).
The company attributed the decline to a changing consumer environment and tougher market competition.
“In the first half of this year, as consumption environment continues to change and industry competition intensifies, the company’s operational strategy at this stage has yet to effectively lead to the materialisation of the targets set during the start of the year,” the company said in its half-year report.
BYHEALTH had similarly underperformed in Q1, as revenue dropped 14.87 per cent year-on-year, which it said due to a lower demand for immune health related products.
The rising cost of raw materials – up by over 30 per cent – was another challenge seen in the past six months.
Of note is the purchasing price of fish oil as a raw material, which is said to have increased by 172.4 per cent. However, the company assured that there was limited impact from the sky-high fish oil cost since it was selling a variety of health supplements.
“Due to market impact, the purchasing price of fish oil, which is one of the main raw materials [used in our products] had jumped 172.4 per cent.
“As the company has a relatively large variety of product categories and require a wide range of raw materials and excipients, the rising cost of fish oil has limited impact on our operating capital.”
Low fish oil yield had pushed up the prices of fish oil in the past year or so.
Industry body GOED (The Global Organisation for EPA and DHA Omega-3s), however, told us that fish oil supply was set to recover following a fruitful fishing season this year.
China’s health supplements market is continuing to expand, with a growing appetite for imports.
In Q1 this year, the value of imports climbed 7.3 per cent to US$1.65bn, based on data from China Chamber of Commerce of Import & Export of Medicines & Health Products (CCCMHPIE).
Revenue declined across key brands
The lacklustre performance was also reflected in BYHEALTH’s main supplement brands.
Revenue of products sold under its eponymous brand was down nearly 20 per cent to RMB$2.64bn (US$368.65m).
Keylid, its joint health brand, similarly reported a revenue decline of 16.81 per cent to RMB$591m (US$82.7m).
Lifespace, the probiotics consumer brand previously bought from Australian entrepreneur Craig Silbery, saw its revenue in China lowered by 24.79 per cent to RMB$210m (US$29.38m).
Although Lifespace has a higher revenue outside of China, this was also slightly down by 4.72 per cent to RMB$511m (US$71.49m) in the first half of 2024.
Coping strategies
BYHEALTH said it would focus on improving its operations and investing strategies, as well as upgrading two of its core products, in the second half of the year.
“In the second half of this year, the company will set the improving of its operation quality as a core target. We will actively adjust and improve the overall operation strategy and investment models.
“At the same time, the company will drive the upgrading of our two core products.”
It added that the transition between the old and new products might cause short-term uncertainties, and this could exacerbate the pressure on its business in the second half of the year.
