Taguig—(PHStocks)—Going from strength to strength as it transforms its business, Splash Corp. (PSE: SPH) increased its net income 13-fold for the full year 2015 on the back of an 8% increase in sales and marginal increases in costs.
Net income for the year was PhP160 million, compared to PhP12 million in 2014, while sales amounted to Php3.78 billion compared to PhP3.49 billion in 2014. On the other hand, cost of goods sold percentage to sales improved at 42% from 45% last year while maintaining the same level of operating expenses at 54% of sales.
The sales increase came mostly from higher sales of the personal care business for both the Philippine Operations, which grew by 12%, and the International Operations which registered a sales increase of 13%. The Food business also registered a sales growth of 3%. Direct Sales continued to transform its business model for long term viability, hence sales decreased by 31%.
Sales of flagship products SkinWhite and MaxiPeel continued to grow at satisfying rates. This despite aggressive marketing of competing products which increased their media and in-store promotions spending to rates several times previous levels. Our communication strategy highlighted the strength of our products in terms of quality and pricing and strong affinity with their consumers. Splash was able to optimize its marketing spend and even managed to decrease its selling expenses through the rationalization of its trading terms with national supermarket and drugstore chains and the efficiencies derived from the integration of distribution under Prime Global Distribution.
SkinWhite Glutathione, a new whitening variant, doubled its sales after a very creative advertising campaign. Also registering a significant increase in sales was Flawlessly You, driven by its endorser Nadine Lustre, a massively popular young star. Splash introduced SkinWhite Classic Whitening Lotion Light, a variant of SkinWhite Classic Lotion that uses a Light-Feel Technology that is easily absorbed so it whitens without leaving a heavy sticky feel.
Hygienix Soap antibacterial was introduced as an initial foray into the mainstream soap market. Distributed exclusively through PureGold, Hygienix Soap, priced lower than its dominant competitor, is doing very well.
The growth of the personal care business in International Operations was mostly through its focus on naturals, capitalizing on the growing trend of consumers toward organic and natural-based products. IOD continues to build its distribution base, focusing on markets where the retail landscape is still developing, like Nigeria in Africa and Indonesia in Asean.
The Barrio Fiesta Manufacturing Corp. (BFMC) of Food business continue to perform as planned: the first five years will be investment in efficiency improvements in production and distribution. These started to bear fruits in 2015 when BFMC registered an operating income of PhP36 million and a net income of PhP10 million. It improved all aspects of operations in the Philippines, particularly its ability to service and deliver customer orders. It also decreased selling expenses by 14% by concentrating on accounts that have long term value, and negotiating better terms.
In International food, Splash introduced new products in the USA market, consistent with its strategy of expanding the portfolio of products under the Barrio Fiesta brand. Products including cooking vinegar, dried fish and dried taro leaves were commercialized in North America and the Middle East.
Prime Global Distribution Corp., which distributes Splash personal care and food products alongside products from other principals in the Philippines, gained new principals: Rhodesian Corp. for its Tai Chi line of pet care, grooming and food supplements, and Healthy Innovations for its Marvel and DC themed health care products. Existing principal Master Chef awarded new territories to PGDC in Luzon.
The transformative steps taken in 2014 and 2015 in Direct Sales have started to turn around the business. Noah, the new Enhanced Direct Sales On-Line System, was successfully implemented to aid in more efficient monitoring and control of transactional and operational matters throughout the DS network. The new system also enables Direct Sales to better manage its accounts receivables. Collection efficiency has also been made a criterion to determine a distributor’s income, to further help in managing accounts receivables.