Yue Yuen Industrial Holdings looked to strong increases in its retail and wholesale operations in China to help fuel a solid increase in profits for the 2006 fiscal year. Net profit increased 18.7% to $353.6 million for its fiscal full year ended September 30 from $310.1 million in the prior year. Excluding an aggregate profit of $11.3 million from an increase in fair value of investment properties and the net gain on derivative and modification/redemption of convertible bonds, Yue Yuen net profit would have risen 4.9% for the year.
Revenue jumped 15.9% for the year to $3.66 billion compared to $3.16 billion in the prior year. Owned-retail in China was the key driver for the year, increasing more than 80%. Same-store sales were up in double-digits for the year. While retail sales surged, and the “Others” category was up in strong double-digits, shipment growth of Sport Sandals lagged behind the rest of the business, increasing in the mid-single-digits for the year. Athletic Footwear and Casual/Outdoor Footwear were both up in the low-teens for the period. Growth in shipments to Europe were up the least, while South America and Asia grew the most.
Yue Yuen said that revenue growth remained steady in the 2007 fiscal first quarter through December, increasing 10% to approximately $962 million. YY said the growth was due to “sustained volume growth in the core manufacturing business and an increase in the contribution of the China retail sales operation.”
Looking ahead at the full year, the company said it expects the footwear-manufacturing sector to continue to see pricing pressure from demand to cut costs along the entire supply chain.
While oil prices have dropped from their peak in Q3 2006, Yue Yuen said there is continued rising pressure on wages and also sees challenges from “currency fluctuations and international trade disputes.”
| Yue Yuen Industrial Ltd. | |||||
| Full Year Sales Breakdown | |||||
| (in $ millions) | 2006 | %/ttl | 2005 | %/ttl | Change |
| Category Breakdown | |||||
| Athletic | $2,110 | 57.7% | $1,899 | 60.2% | 11.1% |
| Casual & O/D | $651.6 | 17.8% | $581.8 | 18.4% | 12.0% |
| Sport Sandals | $45.9 | 1.3% | $43.9 | 1.4% | 4.6% |
| Soles/Comps | $483.5 | 13.2% | $415.0 | 13.2% | 16.5% |
| Retail | $305.0 | 8.3% | $169.1 | 5.4% | 80.4% |
| Others | $61.7 | 1.7% | $46.0 | 1.5% | 34.1% |
| Geographic Breakdown | |||||
| United States | $1,391 | 38.0% | $1,255 | 39.8% | 10.8% |
| Canada | $67.3 | 1.8% | $58.7 | 1.9% | 14.7% |
| Europe | $904.5 | 24.7% | $834.6 | 26.5% | 8.4% |
| So. America | $94.4 | 2.6% | $65.0 | 2.1% | 45.2% |
| Asia | $1,097 | 30.0% | |||
