Yue Yuen Industrial Holdings Limited reported revenues rose 3.6 percent in its fiscal year ended Sept. 30, to $7.30 billion. Growth in U.S. and Asia offset declines in Europe.
Non-recurring profit was up 0.7 percent to $477.7 million. Net profit improved 12.5 percent to $506.2 million from $449.8 million.
Yue Yuen makes footwear for Nike, Adidas, Reebok, New Balance, Asics, Puma and Timberland, among others.
Shoe manufacturing revenues outside Greater China in the year grew 1.5 percent to $5.07 billion, due to increased caution in orders placing by its brand name customers.
Athletic shoes outside Greater China grew 1.8 percent, to $3.75 billion while casual/outdoor sales were up 0.5 percent to $1.25 billion. Sports sandals revenues were $82.2 million, up from $81.2 million a year ago.
Greater China sales, which covers both wholesale and retail shoe and apparel sales, fell 13.6 percent to $1.63 billion, primarily due to factors such as acquisition of the regional retailers, opening of new stores, and promotional sales following by liquidation of inventory.
Soles, components & others revenues were down 2.6 percent to $587.5 million.
By country, sales improved 1.5 percent to $2.04 billion the U.S., grew 9.1 percent to $3.13 billion in Asia; gained 5.9 percent to $374.3 million in South America; increased 3.8 percent to $103.0 million in Canada, and improved 8.3 percent to $185.6 million. Sales to Europe declined 4.5 percent to $1.47 billion.
Gross margins in the year improved to 22.8 percent from 22.1 percent 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. The flattish bottom line on a continuing basis reflects higher operating expenses, driven by inflation in the Asia environment, in particular China, leading to rising wages and higher rental costs.
Looking ahead, Yue Yuen projected that sales growth in both its retail and wholesale areas is expected to be moderate and profit growth will likely be challenged “by the variability of market conditions.”
On the manufacturing side, Yue Yuen said it plans to focus on providing more flexibility for its branded partners to address a more customer-oriented approach. Yue Yuen concluded, “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.”