Shoe maker Yue Yuen Industrial's first-half profit increased 0.8% year-on-year to reach US$169.6m, thanks to increased contributions from its China retailing operations.

The manufacturer of athletic and casual footwear said that turnover jumped 10.6% to $1.9bn for the six months to 31 March .

The group recorded stable sales growth for the footwear manufacturing operation and said the growth momentum of its Greater China wholesale and retail operations remained strong.

Indeed, sales contributions from the wholesale and retail operations in the Greater China region accounted for about 10% of the group's total turnover for the period.

With the surge in retail sales, Asia has become the second largest market for the group and the distribution of turnover among the three major markets of the US, Europe and Asia has become more balanced, Yue Yuen said.

The company forecast that sales growth for the footwear and China retail operations would remain on track for the remainder of the year.

"The group has demonstrated flexibility in production amid the current rapidly changing environment and its commitment in China wholesale and retail operations will bode well for further growth," said Tsai Chi Neng, chairman of Yue Yuen.

The total volume of shoes produced rose by 14.9% year-on-year to 111m pairs, and the company has added 14 new production lines over the last six months, bringing the total number of lines to 387 at the end of March 2007.

Sports sandals was the product with most growth during the period, with sales up 23% to US$42.3, compared to $34.4 last year.

Yue Yuen, which has operations in China, Vietnam and Indonesia, recommended an interim dividend of HK$0.31 (US$0.04) per share, an increase of 6.9% from $0.29 per share last year.

Footwear manufacturing remains the group's major operation, accounting for 77.4% of total sales. Soles and components accounted for 11.8% of total sales, while retail sales accounted for 9.9%.