NuSkin's Pharmanex makes for record 2Q

NuSkin Enterprises has reported record revenues of $310.1 million in 2Q 2005, a 9 percent increase on the prior year period, thanks to its Pharmanex supplements brand, writes Jess Halliday.

Operating income was also up 6 percent, from $34.96 million in 2Q 2004 to $$37.04 million this year.

The boon for the direct selling company has been driven by its Pharmanex division, which reported global revenue of 175.6 million - a 29 percent increase over last year.

Within the Pharmanax fold are three categories of supplement products: Pharmanax Nutritionals targeted for certain consumer groups; condition specific Pharmanex Solutions; and The Right Approach for weight management.

But the company says its Pharmanex Biophotic Scanner is the main reason for the impressive figures. The nutritional testing tool that allows for the non-invasive measurement of carotenoid antioxidants in the body's tissue, giving an indication of how a person's diet and supplements are protecting their cells and overall health.

Ten percent of the Pharmanex growth came from the US market (also the fastest growing overall, with a 9 percent increase in revenue for all divisions), where g3, a nutritional juice drink, was also launched during the quarter.

NuSkin's personal care revenue fell 10 percent compared to prior-year results, to $127.9 million - again, attributed to the emphasis placed on the Pharmanex Biophotic Scanner.

NuSkin's home market of the United States was also the fastest growing, accounting for $39.2 million of overall revenue - 9 percent more than last year.

But it is also onto a winner with its Asian operations. North Asia and South Asia experienced revenue increases of 7 and 6 percent respectively, and in August the company will start trading in Indonesia under the direction of general manager Agung Sardjono, who has been director of Avon Indonesia for the past 15 years.

As with all direct selling companies active in the region however, it is China that is showing the most potential at present, due to the lifting of the ban on direct selling - even if it is not presently apparent.

Revenue from Greater China increased 8 percent to $64.1 million in 2Q 2005 thanks to gains of 13 and 15 percent in Taiwan and Hong Kong respectively, but in Mainland China the results were slightly down as the company adjusts its operations for the new selling environment, which it says will improve its long-term prospects there.

"These adjustments include making modifications to our remuneration plan," said president and CEO Truman Hunt.

"While we are confident these changes will enable us to tap China's potential, our sales representatives will require a few months to adjust their sales and training activities to fit the new plan. Therefore, we feel it prudent to guide to no sequential growth in the third quarter with a return to sequential growth in the fourth quarter. This sequential trend would result in year-over-year growth of 10 to 15 percent in the second half of the year."

Plans are also in place to open for business in Russia in 2006.