Yue Yuen Industrial (Holdings) Limited announced its unaudited consolidated results for the fiscal 2012 first quarter. Total sales rose 12.7 percent to approximately US$1.91 billion, and net profit attributable to shareholders increased by 4.6 percent year on year to approximately US$155.9 million.

In the first quarter, the Group’s shoe manufacturing sales grew 13.8 percent to US$1.37 billion, underpinned by growth in athletic shoes and casual/outdoor shoes sales of 14.3 percent and 16.8 percent, respectively. The shoe manufacturing volume also increased 1.6 percent to 83.4 million pairs. The Group’s shoe manufacturing sales enlarged in all major markets, especially encouraged by  Asia and South America growth.

In respect of the retail and wholesale business of sportswear in the Greater China Region, Sales grew 13.3 percent to US$393.1 million in the first quarter, mainly driven by the improved performance of new stores, the same store sales growth, and year-end promotional sales.

During the period, the Group’s gross margin declined 0.73 percentage points to 22.96 percent (2010: 23.69 percent), primarily  due to higher production costs in footwear manufacturing and  inventory adjustments in  retail and wholesale business, which  offset the positive effects of growing sales.   Meanwhile, selling and administrative expenses increased 19.5 percent to US$294 million (2010: US$246 million) driven by marketing support for retail initiatives and operating overhead expenses.

Financial expenses improved to US$9.7 million (2010: US$10.2 million). As a result, the Group’s net profit attributable to shareholders increased 4.6 percent to US$155.9 million.

Look Ahead
Yue Yuen said the environment for footwear manufacturing is still full of challenges given the expectations of increasing input costs. In addition, worries over the international fiscal situation are expected to stall consumer confidence. Under current circumstance, the Group’s sales increased 8.2 percent year on year to US$2.5 billion for the first four months ended January 2012. Management expects Group sales for this fiscal year to exhibit a moderate level of growth based on the opportunities provided by the London 2012 Olympic Games and the continuous growth in emerging markets. The Group will continue its efforts to meliorate manufacturing efficiency, to enhance  the control over production overheads, and to create more value-added products and services to customers timely and inventively. Furthermore, Pou Sheng International (Holdings) Limited, the Group’s subsidiary, will persist in  its mid- to long-term plans for sales quality improvements,  optimization of human resources, and sales growth while maintaining a healthy inventory level.