HONG KONG: Rising costs limit Yue Yuen profit growth
- Nine-month profit up 1.2% to US$350m
- Turnover up 23.4% to $5.186bn
- Training, wages eat into margins
Casual and athletic footwear business Yue Yuen recorded a slight rise in net profit for the nine months to 30 June, with a strong increase in turnover offset by rising costs for wages and training.
Yue Yuen said its larger customers had seen good sales growth, and retail turnover, which was up 18.1% to $1.062bn, had been boosted by continued economic growth in Greater China.
Shoe manufacturing, which accounts for more than 70% of the company’s turnover, recorded turnover growth of 25.8% to $3.684bn, underpinned by volume growth of 17% and a 7.6% increase in average selling prices.
Yue Yuen said its new production facilities in inland China and other areas had created short-term operating challenges, because new employees required “elaborate training”.
Furthermore, it added, wages had risen in China and other areas as a result of governments’ employment policies, eroding margins as a result.
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