Hong Kong-based shoe manufacturer Yue Yuen Industrial (Holdings) Limited,

- Which has production facilities in China, Vietnam and Indonesia  and manufactures footwear for the likes of Nike, adidas, Asics, Reebok, Puma and Timberland - has published figures for the full financial year 2004 ended September 30, 2004, reporting what it calls a ‘satisfactory’ increase in sales and turnover.

Turnover rose by 8.4% to $2,720 million whilst net profit declined by 1.6% compared with 2003 to $303 million. The group said that although the increase in turnover was satisfactory, profitability was affected by rises in the cost of raw materials. The company stated that crude oil and commodity prices exerted substantial pressure on the costs of petrochemical derivatives, the key components in the manufacture of midsole and outsole of shoes. Fluctuations in raw material prices affected the group’s gross profit margin, due to the time lag in reflecting to the new pricing and resistance levels in the market. The increase in average selling price in the second half of fiscal year 2004 was not enough to prevent an overall reduction in the margin during the full year.

The USA remained the largest consumer of the company’s products accounting for 41.2% of its business, worth $1,121.3 million. However, the Asian market saw the largest increase, rising 22.9% year-on-year to reach $701.1 million. Europe was the only market to show a decline in turnover, recording a 2.6% decrease compared with 2003.

The Group’s major product, athletic shoes, accounted for 61.2% of total turnover, slightly lower than in the previous year. The casual/outdoor shoes and sports sandals categories saw rises in their contribution to revenue, of 16.3% and 32.5% year-on-year in 2004, respectively. Soles and components, which includes the upstream businesses acquired in 2002, reported 7.1% year-on-year growth in turnover. One area of the company that did see an enormous 188% increase was the turnover created through retail sales of apparel and footwear.  China’s retail sales jumped to $74.2 million in 2004, as a result of continued expansion of the group’s retail network.

Despite being cautious, the company remains positive about the future, looking forward to exploiting all the possibilities presented by the Beijing Olympics in 2008. The Group has built up one of the largest sporting goods retail networks in Beijing ahead of the Games. It currently has more than 300 shops/counters and plans to have more than 1,000 operating in China by the time the Games begin.

“I believe the Group is well positioned to meet the keen competition we will face in both our core manufacturing sector and the new business segments. We see the coming year as a period in which to consolidate existing operations and to expand the new horizons in order to build a solid platform for future growth,” said group chairman Mr. Tsai Chi Neng.

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