Financial Report
Alticor Posts Sales of $6.3 Billion
Alticor Inc. and its family of companies reported sales of $6.3 billion for the 2006 performance year, which ended December 31. Sales declined slightly from $6.4 billion in 2005. Company officials attributed the dip to a period of regulatory uncertainty that chilled sales in China, the company's largest direct selling market. However, Amway (China) Co. Ltd. received its direct selling license Dec. 1, 2006, leaving company officials optimistic that China sales will return to growth this year.
The company still exceeded its sales forecast for the year. "After six straight years of growth, we expected we might be down this year because of the China situation, and we planned for that. We are still very pleased with these results, because there was very strong growth in several of our mature markets as well as in our newest ones," said Alticor Chairman Steve Van Andel.
"No one works harder than the people who sell our products around the world. We thank all of them for their efforts, which helped us beat targets in a challenging year," said President Doug DeVos. "Going forward, we have placed new emphasis on innovation throughout the company. We expect that will result in better products, new approaches, and increased appeal to consumers in our markets around the world."
Alticor operates primarily through Amway Corp., a global leader in direct selling; Quixtar Inc., a North American Web-based business opportunity; and Access Business Group L.L.C., a product-development, manufacturing and logistics provider to Amway, Quixtar and other companies.
Amway
Amway, a global leader in the $102 billion direct selling industry, saw 45 of 55 affiliate markets post sales increases this year. Noteworthy increases were registered in Europe, where sales rose 42 percent, led by new markets Russia and Ukraine.
More than 70 percent of the company's sales come from Asia. Strong performers in 2006 included the Philippines, Malaysia, Thailand and Singapore. Korea sales increased by 4 percent, while Japan sales declined.
Sales for Amway (China) Co. Ltd. (ACCL) declined 23 percent from 2005, but China continues to be Amway's largest individual market, with more than 180,000 active sales representatives and more than 180 retail shops and service centers.
"We lowered our sales targets in China last year, knowing that our sales force would be distracted until our license was granted. The resolution of the China issue gives us great optimism, and we expect ACCL to continue to lead the direct selling marketplace in China," Van Andel said.
Latin America had an overall solid performance, with especially strong sales this year in Mexico, Honduras, Guatemala, El Salvador and Puerto Rico.
"We set out a couple of years ago to concentrate our efforts on improving the performance of our existing markets, and we're now seeing the fruits of those efforts," DeVos said. "As a result, more customers throughout the world are discovering the great products and services we provide."
Quixtar
In North America, Quixtar, established in 1999, introduced new products and reported its fourth straight year of sales surpassing the billion-dollar mark.
This year, Quixtar rolled out its first national advertising campaigns. The "Land of Will" television and "It's Been Another Good Day" print campaigns appeared last fall in U.S. and Canadian media, including NBC's Sunday Night Football. National print ads for Nutrilite brand nutritional supplements appeared in Newsweek in the United States, and Maclean's in Canada.
"Quixtar continues to adapt to the changing marketplace online," Van Andel said. "They have honed their skills at online marketing, streamlined the Web site based on user feedback, and maintained impeccable standards for order accuracy and customer satisfaction."
Access Business Group
Access Business Group enjoyed an outstanding year in 2006. Access Business Group led Amway and Quixtar to several new product launches this year: expanding Atmosphere air treatment systems into seven additional markets, redeveloping the core Double X nutritional supplement, launching the Artistry Dramage 14 skin care system in China and developing a children's DHA supplement called Brainiums, available in the United States and Korea.
"Since we became a company six years ago, we've invested heavily in our people, our processes and equipment. This is paying dividends, as we have more capacity to work with and expertise to offer our customers. The gains we've made prepare us to support some great new ideas in our core business," said Al Koop, Chief Operating Officer for Access Business Group.
Its third-party product development, manufacturing and logistics sales for the year totaled $138 million in revenue, an increase of more than 12 percent from 2005. These sales are in addition to products and services sold to sister companies Amway and Quixtar.
Alticor Corporate Enterprises
This year Alticor announced a new holding company for its non-direct selling companies: Alticor Corporate Enterprises (ACE). The new company is parent to two new members of the Alticor family of companies as well as Amway Hotels Corp.
"We expect these companies and investments to bring a steady flow of consumer insights and innovations to Alticor," said ACE Chief Operating Officer Bill Payne. "ACE brings us closer to the marketplace and that will be a benefit to Amway and Quixtar as well."
In July 2006 Alticor announced the acquisition of Gurwitch Products, a luxury cosmetics and skincare company that develops and markets cosmetics under the brand name Laura MercierŪ, from The Neiman Marcus Group. Gurwitch allows Alticor access to powerful marketing, research and development talent in the premium beauty industry. Alticor expects to invest in its Artistry brand of cosmetics and skincare products with the insights gained from this relationship.
In December 2006 Alticor announced a new technology venture that enables power to join the intelligent wireless revolution. Fulton Innovation L.L.C. has been created to license and market exciting new technologies such as eCoupledT, which enables electronic devices like cell phones to be charged wirelessly.
In August 2006 Alticor increased its majority stake in Interleukin Genetics, which develops innovative nutrition and health products, including the Quixtar-marketed Gensona line of consumer genetic tests and accompanying nutritional supplements.
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