Yue Yuen reported revenues rose 9.5 percent in its first half ended May 31, to US$3.61 billion. Recurrent net profit was up 6.4 percent. Net profit attributable to owners of the Company increased 21.2 percent year on year, to approximately US$ 278.9 million.

Non-recurrent profit and one-off items affected the Group's profit.


In the first six months of the Fiscal Year 2012, the Group's shoe manufacturing turnover grew 9.4 percent to US$2,557.5 million, underpinned by growth in athletic shoes and casual/outdoor shoes sales of 8.9 percent and 11.5 percent respectively. Total shoe manufacturing volume declined slightly by 1.2 percent to 160.8 million pairs. The Group's shoe manufacturing turnover grew in all major markets, with the best growth rates being achieved in the China and the South America markets.

In respect of the retail and wholesale business of sportswear in the Greater China Region, Sales grew 12.0 percent to US$ 778.3 million in the first six months of the Fiscal Year 2012, which is mainly due to acquisition of the regional retailers, opening of new stores, and promotional sales following by liquidation of inventory.

Excluding retail sales, Asia turnover was US$775.2 million and US$673.2 million, representing 21.5 percent and 20.3 percent of the total turnover in 2012 and in 2011 respectively.

During the period, the Group's gross profit increased by 10.1 percent to US$831.7 million (2011: US$755.6 million), primarily due to the stabilization of spot prices for materials and energy costs, as well as some increase in operating efficiency. Meanwhile, selling, distribution and administrative expenses increased by 13.6 percent to US$576.9 million (2011: US$508 million) driven by inflation in the Asia environment, in particular China, leading to rising wages and to higher rental costs. Share of results from associates and jointly controlled entities improved by 98.0 percent to US$58.4 million (2011: US$29.5 million). As a result, the Group's net profit attributable to owners increased by 21.2 percent to US$278.9 million.

Forward Looking

Being a manufacturer operating in Asia, the Group has to actively manage the inflation sprouting in the local economies; and has faced the challenges of unease global consumer confidence and spending momentum caused by the sovereign debt issues appearing in the European Monetary System. Despite the existing difficult global economic conditions, the Group's turnover increased by 8.5 percent year on year to US$4.2 billion for the first seven months ended 30th April 2012. Management expects economic activity in China will slow down for the rest of the year. The Group will continue to find manufacturing efficiencies, better manage its production overheads, and look for ways to further strengthen its relationships and collaboration with its existing customers. Pou Sheng International (Holdings) Limited (“Pou Sheng”), the Group's subsidiary, has been adversely affected by a higher level of inventory and general inflation in China. Pou Sheng is in the process of restructuring the business to return it to a trajectory of growth in the medium term. The current focus of business of Pou Sheng will be on actively adjusting inventories and enhancing the standards of operation to recover the profitability and maintain the leading status in China.