Yue Yuen Industrial (Holdings) Limited reported that total revenue rose 7.4 percent to approximately US$4.25 billion for the fiscal first half period ended June 30. Recurring operating profit was down 4.3 percent to US$208.8 million compared to the same period last year. The net profit attributable to Owners of the Company for the first half 2015 amounted to approximately US$210.3 million, more than double the bottom line profits in the first half last year.
The Group had a non-recurring profit for the half year of approximately US$1.5 million, which included US$12.2 million of gain due to fair value changes on derivative financial instruments but offset by impairment losses. For the same period last year, there was a non-recurring loss of approximately US$116.7 million, which mainly consisted of US$90 million of provision for contributions to social insurance benefit and housing provident fund (collectively the “Employee Benefit Payments”) for employees in China and US$25.2 million of losses due to fair value changes on derivative financial instruments.
The Board declared an interim dividend of HK$0.40 per share for this period: an increase of 14.3 percent
compared to the interim dividend of fiscal 2014.
Sales of athletic shoes were up by 4.4 percent and whereas the sales of casual shoes were down by 4.0 percent. Total volume of shoes sold increased slightly to 159.1 million pairs for the period. Sales of sandals were up 5.4 percent for the six month period while the retail business was up 23 .2 percent for the first half.
With regards to the retail and wholesale business of sportswear in the Greater China Region, sales increased by 23.2 percent to US$1.19billion in the six months period compared to US$963.2 million recorded in the same
period last year, due to factors such as strategies to improve operating efficiency and increasing the number of
stores in the network, as well as selecting more popular merchandise for stocking.
During the period, the Group’s gross profit increased by 8.3 percent to US$959.2 million. When looking at the
underlying business units, gross profit for the manufacturing operations involving international performance
brands fell slightly due to rising costs for direct materials and labor as well as for production overhead compared to the same period last year. Pou Sheng had a gross profit increase of 32.6 percent to US$381.8 million on account of the decision to wholly focus on the retail business, higher operating efficiency, and better merchandising strategy.
Selling & distribution expenses and Administrative expenses
For the Group, the sum of Selling & distribution expenses and Administrative expenses increased by 14.6 percent compared to the same period last year. For the manufacturing operations, Selling & distribution expenses and Administrative expenses increased by 9.0 percent and 9.8 percent respectively compared to the same period last year.
Increase in these costs were mainly attributable to increase in salary and employee welfare expenses. For Pou
Sheng, Selling & distribution expenses increased by 23.9 percent and Administrative expenses decreased by 0.1 percent respectively compared to the same period last year. The increase in Pou Sheng’s expenses was attributable mainly to increased number of directly operated stores. As at June 30, 2015, the number of directly operated stores for Pou Sheng increased by 1,004 compared to June 30 last year.
For the Group, Other expenses declined by 53.4 percent compared to the same period last year. Most of this difference was due to the US$90 million provision accrued in the same period last year for contributions to the Employee Benefit Payments for employees of the Group's China factories.
Fair value changes on derivative financial instruments
During the period, the Group recorded a gain of US$12.2 million due to fair value changes on derivative financial instruments, compared to a loss of US$25.2 million recognized last year due to the volatility and depreciation of RMB in the period.
Share of results from Associates and Joint Ventures (” Share of A&JV ”)
At the Group level, Share of A&JV increased by 20.3 percent to US$36.9 million. For the manufacturing operations, Share of A&JV experienced an increase of 14.5 percent to US$37.1 million. For Pou Sheng, the share of loss from A&JV was reduced by 84.2 percent to a loss of US$0.3 million.