The group changed its financial year end from September to December in fiscal year 2012, so whenever possible pro forma figures for the 12 months period ended in 31st December 2012 will be used to ensure more meaningful comparison.

In its recent announcement, Chairman Lu Chin Chu stated that: “the Group’s sales to its customers were within management’s expectations. Fiscal 2013 was expected to be somewhat weaker than the same reporting period in 2012 due to the lack of catalysts such as the European Cup and the Olympics.” A reflection on national and international conditions follows: “Economic and financial issues regarding the Economic Union Monetary System (EUMS) were beginning to affect some of the leading member countries of the EUMS. In turn this hurt general consumer sentiment within the EU (…) Both in the Europe and the US, discussions regarding the need for reductions in government expenditures and social benefit payments, as well as approaches to increasing tax revenues, were in news headlines. The PRC economy continued to be challenged with annual GDP growth occurring at a slower rate, rising consumer prices and the trend of further appreciation of the RMB during the year.” Despite the challenging environment, the “Group recorded increase in both footwear manufacturing and retail sales”, while they continue to “enhance factory productivity and supply chain efficiency to offset the rising input costs”.

The turnover for footwear manufacturing activity for the group increased in 2013 when compared to the previous pro forma period, reflecting increments in both the volumes and average selling price. Reviewing total turnover by product category, athletic shoes accounted for 50.3% of total turnover and casual and outdoor shoes for 17.9%. Sports sandals represented a small share of 1.1% and soles, components and others 7.9%. Remaining 22.8%, corresponding to 1 727 million USD, is generated by retail sales, from the 3 665 directly operated counters / stores in Greater China and the 2 263 sub-distributors in the PRC (People's Republic of China). During the year under review the group’s shoes production reached 313.4 million pairs and was distributed as follows: 34% in PRC, 34% in Vietnam, 31% in Indonesia and 1% in others.

Total net profit amounted to 434.8 million USD in 2013, down 7.1% compared to 467.9 million USD in the same period last year. Going back to 2008, profit was at its lower level as profit was always above 450 million USD during this six years’ period.

Basic earnings per share were 26.37 USD cents in 2013, which compares to 28.37 USD cents in the year ended in December 2012, a 7.0% decline.  Yue Yuen Industrial (Holdings) Limited shares were last traded at 22.5 HKD at the Hong Kong Exchanges and Clearing Limited on the 5th of May (approximately 2.90 USD, as per exchange rates published by the European Central Bank on that day).

As for future developments, the company believes long term planning will be crucial to reach the development targets, namely at the following levels: human resources management, industrial process management, and end-to-end supply chain management.  The company is also expecting that major supporting events, such as the World Cup in Brazil, will raise people’s interest in sports, and consequently improve demand for sporting goods, including athletic shoes. However, the company expectations remain unclear for 2014, as several countries still present varied economic outlooks. Yue Yuen Industrial (Holdings) Limited is also mindful of the PRC government’s announcement about the shift in focus from high economic growth rate to market reforms, which leads to expectations about slowing economic growth.

Yue Yuen Industrial (Holdings) Limited was founded in 1988 and it has been listed on the Stock Exchange of Hong Kong since 1992. The group has two main businesses: footwear manufacturing and operation of a retail network. As a footwear manufacturer the group operates in the casual and athletic segment, as a supplier of world known brands such as Adidas, Nike, Reebok, New Balance, Puma, Timberland, Converse and Asics. Its factories are based in China, Indonesia, Vietnam and other Asian areas. The company assures its retail business segment through its subsidiary Pou Sheng International Limited, which operates mainly in Greater China and whose main brands in the portfolio are Nike, Adidas, Converse and Puma.

The group recently faced a major strike at one its factories in Gaobu, with workers claiming missing social insurance contributions and failed payments referring to housing funds. The company issued a statement on the 25th of April where it estimated that the loss caused directly by the interruption of the operations at the Gaobu Factory was approximately 27 million USD. At that time the company also announced they would be doing adjustments to the employee benefit scheme, alerting to the "material adverse effect on the financial performance” of the company, while it confirmed that 80% of the staff of the factory had returned to work. Regardless of that, the strike might have further implications, not only for Yue Yuen Industrial (Holdings) Limited, but for all labor-intensive manufacturing industries, as similar demands might add more constrains to many plants already pressured by rising labor costs in the country.