The world's largest shoe manufacturer, Yue Yuen Industrial (Holdings) Ltd, said on Monday that its 2001 profit growth was hit by increased overhead costs and losses from associate companies.

The company, which makes shoes for several major brands including Nike and Timberland, said net profit for the year to September 30 rose 1.2 per cent to US$212.8 million from US$210.2m last year.

Turnover increased 5.2 per cent to US$1.78 billion from US$1.69bn, while its total production volume jumped 10 per cent to 113.5 million pairs of shoes from 103.1 million pairs.

However, Yue Yuen said fiscal 2001 total operating costs increased 5.6 per cent to US$1.61bn, while finance costs for the 12 month period leapt 46.7 per cent to US$24.59m.

Its associate companies reported a loss of US$454,000, compared with a profit of US$4.78m last year, with athletic shoe production accounting for 73 percent of Yue Yuen's total revenue.

Casual shoe production accounted for 19 per cent of total sales, with the manufacture of sole and components making up the outstanding eight per cent.

The footwear giant added that it was currently looking at expanding its wholesale distribution and retail operations in China where it presently operates around 20 stores.