Hai-O Enterprise Bhd recorded a pre-tax profit of RM9 million in the second quarter ended Oct 31, 2010, compared to RM28.6 million in same period last year.

The lower profit was due to lower revenue of RM52.6 million compared to RM132.3 million last year.

For the six-month period, the company's pre-tax profit fell to RM19.8 million from RM54.9 million in the previous year on revenue of RM107.3 million and RM280.9 million, respectively.

Hai-O in a filing to Bursa Malaysia today said the drop in revenue and profit was mainly due to lower contribution by the principal subsidiary, which is the multi-level marketing (MLM) division.

It added, recent amendments to the Direct Sales Act have affected the confidence of the direct selling industries, coupled with slower membership growth, having directly affected the performance of the MLM division.

However, the board of directors are of the opinion that the group will continue to perform profitably in the next two quarters after the recent validation of the five-year direct selling licence to the MLM division by the Ministry of Domestic Trade, Co-operative and Consumerism.

It said the validation has enabled the company to plan for a longer term strategies and create confidence in the market.

The division is taking proactive measures to strengthen its education and training programmes by focusing on product knowledge, establishing networking and inculcating professionalism among the distributors, it added.

In addition it said, the group is continuously looking for new key products to enlarge its product range. -- Bernama