• H1 earnings fall 72%
  • Gross margin down 8.2pp
  • Revenue up 26.5%

Cotton and fabric supplier Texhong Textile Group saw its earnings decline in the first half, due to weak yarn prices in China and the depreciation of the yuan.

Profit attributable to equity holders dropped 72% to CNY125m (US$20.3m) in the six month period to the end of June.

Gross profit margin was down 8.2 percentage points to 13.2%, primarily due to the selling price decrease in the yarn market in China.

"The yarn selling price in the Chinese market has been sluggish this year due to the uncertainties in the policy reform in cotton purchase or subsidy by the Chinese government," the company noted. "In particular, following the Chinese government cutting the auction price of the national cotton reserve in April this year, the yarn market prices in China had further declined."

Revenue, however, was up 26.5% to RMB4.57bn. Yarns continued to be the major products of the group, which contributed to a turnover of RMB4.17bn during the six months, accounting for 91.4% of total group turnover. The increase was mainly driven by sales volume growth.