Companies

Yue Yuen on a downward trajectory

Nov 16, 2023 Hong Kong

The Hong Kong-based group recorded a decline in revenue and profits in the first nine months of the year, as compared to 2022, due to a weak performance of its manufacturing business

At the end of September 2023, Yue Yuen’s revenue declined by 14.1%, on a comparable basis to the same period of last year, reaching 5.98 billion US dollars. This was “due to the weak performance of its manufacturing business resulting from soft global demand for footwear amid the ongoing industry-wide inventory digestion cycle, offsetting the recovery of Pou Sheng”.

In the first nine months of the year, the group’s footwear manufacturing activity decreased by 20.4%, as compared to the same period of 2022, totalling 3.49 billion US dollars. The volume of shipped pairs was down by 24.5% in this period to 160.9, while the average selling price rose by 5.3% to 21.71 US dollars. The latter shows the “relatively resilient demand for the Group’s high-end footwear helping offset the impact of a volatile base period”.

Including footwear, as well as soles, components, and others, the manufacturing business revenue in the first nine months of the year was 3.79 billion US dollars, which reflects a decline of 20.9%, on a comparable basis to a similar period of 2022.

Meanwhile, the revenue attributable to the group’s subsidiary Pou Sheng grew to date by 0.7%, amounting to 2.19 billion US dollars, as compared to a similar period of the previous year; in renminbi terms, it increased by 7.3% year-over-year, “supported by an overall recovery of the sales environment and foot traffic” in mainland China, “the resilient performance of its omni-channels”, “as well as a low base effect”.

In the first nine months of 2023, the profit attributable to owners of the company totalled 137.7 million US dollars, down by 49.0% from the same period of last year.

Outlook

“The Group is optimistic about the long-term prospects of its manufacturing business and confident that a gradual recovery trend will emerge in the industry”, reads the statement. “However, order visibility remains cloudy, and the global footwear industry is expected to remain volatile and conservative in the near term, which is attributed to brands being at different points along the destocking cycle and the uncertain macroeconomic outlook being driven by persistent inflation and elevated interest rates”.

Therefore, Yue Yuen will continue to “monitor the situation and dynamically allocate its manufacturing capacity to balance demand, its order pipeline and labour supply, while lifting its hiring freeze and restarting its production capacity expansion plan at an appropriate time.”

Image Credits: Towfiqu barbhuiya on Unsplash

Hong Kong Footwear Manufacturing Quarter Results Results Shoes Yue Yuen