Yue Yuen Industrial Holdings, the world's biggest maker of athletic footwear, has reported a 9.9 per cent drop in third-quarter net profit due to downward pressure from high material and labour costs.

For the three months ended June, third-quarter net profit was US$84 million, down from US$93 million a year earlier.

By way of an explanation, the company said in a statement on Friday: "Order flows from major customers continued to be stable, but the group's gross margins were affected by increases in production costs stemming from continual increases in material costs, upward reversion of wages in China and increases in energy costs."

Yue Yuen, which makes athletic shoes for brands including Adidas, Reebok and Nike, said its third-quarter revenue rose 11.9 per cent to US$859 million from US$768 million.

Looking ahead, the company says high oil prices "and fluctuation in prices of petrochemical products will continue to exert pressure on the group's production costs."