Yue Yuen Industrial Holdings Limited reported that fiscal full-year 2012 revenues for the group rose 3.6 percent to approximately $7.30 billion. Recurring profit was up 0.7 percent. The group also had non-recurring profit for the period. When aggregating both categories of profit, then the net profit attributable to owners of the company for the first twelve-month period of the Fiscal Year 2012 amounted to approximately $506.2 million.
The company's board declared a second interim dividend of HK$0.65 per share. When combined with the first interim dividend, total dividends paid per share for the twelve month period amounted to HK$1.00, representing an increase of 11 percent compared to the same period last year.
Operations
In the first twelve months of the Fiscal Year 2012, the group’s shoe manufacturing revenues only grew by 1.5 percent to $5.07 billion, due to increased caution in orders placing by its brand name customers. Sales of athletic shoes and casual/outdoor shoes were up by 1.8 percent and 0.5 percent respectively.
Total shoe manufacturing volume fell by 5.4 percent to 308.9 million pairs. The group’s shoe manufacturing revenues experienced growth for the U.S. and Asia regions, but saw a decline for Europe.
With regards to the retail and wholesale business of sportswear in the Greater China region, sales increased by 13.6 percent to $1.63 billion in the first twelve months of the Fiscal Year 2012, primarily due to factors such as acquisition of the regional retailers, opening of new stores, and promotional sales following by liquidation of inventory.
During the period, the group’s gross profit increased by 6.9 percent to $1.66 billion, up from $1.56 billion in 2011, as a result of the trend of stable spot prices for materials and energy units purchased. Gradual improvement in factory operating efficiency also contributed to the gross profit improvement.
Meanwhile, selling, distribution and administrative expenses increased by 9.1 percent to $1.15 billion from $1.06 billion, driven by inflation in the Asia environment, in particular China, leading to rising wages and higher rental costs. Share of results from associates and jointly controlled entities increased by 45.1 percent to $90.7 million, up from $62.5 million in 2011. As a result of the aforementioned items, the group’s net profit attributable to owners amounted to $506.2 million.
Looking Forward
The consumer market for athletic shoes and sportswear can undergo changes quickly due to the variation in consumer preferences and tastes. Given the structure of the group’s business, the group recognizes it must adopt a more customer-oriented approach for both the global manufacturing business as well as the retail business in China. For the manufacturing business, the group looks to enhance its production capabilities by supply chain integration and manufacturing excellence programs so as to serve its brand name customers with quality and flexible productions under dynamic market conditions. For the retail side, the group has been optimizing its operation to be able to set sales plans by referencing latest and effective consumer preferences, which will also contribute significant improvements on inventory management. Sales growth in both areas of business is expected to be moderate and profit growth will likely be challenged by the variability of market conditions. In the long term, the group expects there will be greater demand for athletic and casual shoes as well as sportswear, and that the enhancements made by the group will allow it to participate in the next upswing of demand.
