The Board of Directors of footwear manufacturing powerhouse Yue Yuen Industrial (Holdings) Limited informed investors and potential investors that based on a preliminary review of the Group’s unaudited consolidated financial statements for the three months ended March 31, 2023, it expects to record a decrease of 40 percent to 45 percent in profit attributable to the owners of the company as compared to a profit of $88.6 million for the corresponding three-month period in 2022. The decrease in profit was said to be mainly attributable to:
- The decline in manufacturing business revenue generated from manufacturing business decreased by approximately 18 percent as compared with the corresponding period of last year, led by softer global demand for footwear amid relatively high inventory levels across the industry; and
- Operating deleverage within the manufacturing business: a weak order book that impacted the capacity utilization rate and operating efficiency of the company’s manufacturing business, resulting in operating deleverage affecting its profitability.
Yuen Yuen said current macroeconomic headwinds and high inventory levels across the industry would continue to weigh on order visibility and global demand for footwear in the near term. The Group said it would continue proactively monitor the situation and dynamically allocate its manufacturing capacity to balance demand, its order pipeline and labor supply. The Group said it would also focus on cost control and cash flow management to ensure the health of its liquidity and financial position.
The company reported in April that net consolidated accumulative operating revenue for the three months ended March 31 was $2.11 billion, a 12.0 percent decline versus the year-ago year-to-date period. Manufacturing revenue was down 18.1 percent, and Pou Sheng’s retail business was up 6.5 percent in RMB. Manufacturing business revenues fell more than 21 percent in March, while its retail business surged nearly 30 percent for the month.
