Strong domestic demand has helped China's largest cotton textile producer, Weiqiao Textile Company Limited, to an 11.5% jump in first half profit.

For the six months to 30 June, profit rose to CNY670m (US$88.8m), while revenue rose by a marginal o.o3% to CNY9,267m year-on-year.

Company chairman Ms Zhang Hongxia said that during the first half, the growth of China's textile exports was hampered by "the continuous appreciation of RMB, the downward adjustments to the VAT rebate for export and the rise in labour costs."

She added that the group continues to improve its operational efficiency through equipment upgrades and product mix optimisation, as well as reducing its energy consumption to control production costs.

In terms of sales volume, cotton yarn, grey fabric and denim remained the group's core products, accounting for 45.9%, 47.8% and 6.3% respectively of Weiqiao's total revenue.

Sales of cotton yarn rose by 10.6% to CNY4,250m, while sales of grey fabric fell 9.8% to CNY4,431m. The biggest growth was seen in denim sales, which rose 22.8% to CNY582m.

The group's production volume has risen to 437,000 tons of cotton yarn, 781m metres of grey fabric and 88m metres of denim.

Domestic sales reached CNY5,613m, comprising 60.6% of the group's total sales.

Looking ahead, Ms Zhang believes the overall industry profitability in the People's Republic of China will be impacted by rising capacity and costs of production, including cotton price, labour and energy costs.

However, these problems are likely to be offset by rising domestic consumption and the potential to increase exports to Europe once the textiles safeguard agreement expires at the end of the year.