New Image Group looks to new product launches

Media Release: February 27, 2009

Buoyant New Image Group looks to new product launches

With growing sales, strong half-year profit, and $14.7 million cash on hand, New Image Group is experiencing accelerated growth.

The NZX listed health and wellness product company reports revenue of $40.9 million for the December 2008 half year – up 150% on the same period the previous year. Net profit after tax of $5.59 million is up 277% on the comparable period’s $1.48 million.

Chief Executive Stephen Lyttelton says New Image is expecting revenue and profitability to be sustained for the second half of the current financial year. The company has revised the full year revenue forecast to in excess of $80 million.

Mr Lyttelton says strong trading conditions were experienced during the six months to December 31, especially from Malaysia and Taiwan. The direct sales operation in the region, headed by New Image’s Asia Pacific Vice President NH Chua, continues to generate significant revenues. New Image now has offices in nine countries with expansion into Thailand and Japan planned for later this year.

Chairman and Founder Graeme Clegg says New Image has both a recession-proof direct selling model and new product lines, both of which are expected to continue to deliver strong export growth. With more than 90% of the company’s products exported, New Image is among leading companies in New Zealand that exceed $50 million in annual exports.

Mr Clegg says New Image has more than 150,000 product users in its direct sales network internationally and close to 10,000 new members joining that network each month.

“In today’s uncertain marketplace, highly qualified people are looking for proven opportunities to earn additional income,” he says. “New Image offers them an attractive proposition.”

Mr Lyttelton says generally people do not cut back on personal health spending in a recession as maintaining their health is important.

“Recent data out of the United States shows supplement sales in food, drug and mass merchandiser stores were up six per cent for 2008, running against negative sales trends elsewhere in the US economy,” he says. “In addition nutritional products from ‘first world’ food sources are increasingly in demand by Asian communities. New Image has received significant inquiries from international buyers for infant formula.”

The company is responding through its newly formed Hong Kong joint venture, Golden Dairy (HK), in which it has a 60% interest. Infant formula, fortified with colostrum as an ingredient, is being produced at its plant in West Auckland and will target a niche position in Asian markets.

Colostrum – the first milk fluid containing immune and growth factors that female mammals provide their newborn babies in the first few days after birth – is a cornerstone of New Image’s products. New Image is the largest producer of colostrum products in the world. It hero product, “Alpha Lipid Lifeline,” contains colostrum sourced from cows, probiotics, vitamins and minerals and is taken as a breakfast drink, or in tablet or capsule form.

Mr Clegg says colostrum is an ideal ingredient to include in infant formula as it contains anti-bodies that have been shown to protect against pathogens causing infections. Statistics show millions of babies die annually from infections such as rota virus, salmonella and E coli.

Colostrum will also be the key ingredient in a new product to be launched first in New Zealand, then in quick succession to retail hypermarkets throughout Asia.

The nutritious ready-to-drink colostrum beverage will be produced at the company’s new manufacturing plant in Penrose, Auckland. This will be the first time colostrum is sold in liquid form in the international market. The manufacturing process applies a new food processing technology, which the company has acquired under licence from Fonterra. Fonterra developed the technology over seven years and has applied for patents in 30 countries.

Mr Lyttelton says the technology licence enables New Image to leverage its own extensive scientific knowledge base, while complementing its own existing channels and powder-based products.

In its half year result, New Image reports a maiden interim dividend of half a cent per ordinary share, which will be paid on April 3.

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