• FY earnings down 51%
  • Sales decline 19.2%

China’s Weiqiao Textile Company said it was affected by a persistent decline in cotton price, rising labour costs, shrinking downstream demand and the declining sales price of products in its last fiscal as earnings and sales fell.

Net profit was down 51%, in the year to the end of December, to CNY308m (US$49.6m), while sales dropped 19.2% to CNY11.21bn.

Weiqiao said it was affected during the year by factors such as the adjustment to the cotton policy, the “drastic” decrease in cotton price and the “wait-and-see approach adopted” by downstream customers.

As a result, production volumes of the group's cotton yarn was down around 19.3% to 394,000 tonnes, and grey fabric down 4.2% to 978,000,000 meters. The production volume of denim, however, was up 4.1% to 76,000,000 meters, mainly due to the increased production volume of middle to high-end denim based on market demands.

Looking ahead, chairman Zhang Hongxia, said Weiqiao will continue to adjust its product mix according to clients' need, gradually increase its share of middle to high-end products, and improve the gross profit margin of products by developing diversified and functional products.

“The group will source cotton globally and improve cost controls in-line with changes in the market for raw textile materials. The group will also strive to reduce costs and improve efficiency by leveraging on new technology, advanced concepts and scientific management model. While focusing on reducing the gearing ratio, financial costs and solvency risk, Weiqiao Textile will further enhance its ability to manage risks.”