Everest Textile Co (宏遠興業), a fabrics and garments manufacturer, yesterday forecast a year-on-year increase in revenue this quarter, citing strong growth momentum extending from last quarter due to customers’ low inventories.
Everest’s clients include North Face Inc, Columbia Sportswear Co, Decathlon Group and Nike Inc.
Due to the impact of a slow season and the appreciation of the New Taiwan dollar against the US dollar, the Tainan-based company said its sales this quarter might drop slightly from last quarter’s NT$2.09 billion (US$68.21 million), but sales are expected to pick up next quarter due to better production efficiency.
“We plan to spend between NT$700 million and NT$800 million on capital expenditures this year, mainly to improve production efficiency by replacing more than 300 flat-knitting machines in our plants in China and Thailand,” Everest president Roger Yeh (葉清來) told reporters on the sidelines of a functional fabric launch event in Taipei.
The replacement of old machines that have been in use for more than a decade is expected to boost production efficiency in the company’s manufacturing operations in China and Thailand by 40 percent, in addition to providing better product quality.
Yeh said Everest also plans to purchase 88 new knitting machines, with 35 of them to be used for developing and producing body mapping fabrics for functional clothing.
The machine replacement plan is set to benefit the firm’s sales in the second half of this year, Yeh said.
He declined to give a range for a sales estimate.
Yeh said the company has no plans at the moment to build new overseas plants, citing sufficient production capacity to meet demand.
However, the company plans to continue to invest in research and development, which is expected to enhance Everest’s market competitiveness through higher added value in its products, and therefore boost its gross margin.
In the first quarter, Everest’s gross margin stood at 18.49 percent, up 2.5 percentage points from last year’s 15.99 percent. Yeh attributed the improvement to lower costs and higher added value for the firm’s products.
Yeh said the firm’s Eversmile brand garment stores, which accounted for between 2 percent and 3 percent of the company’s total revenue last quarter, expanded to 110 locations across the nation, with 70 percent of the apparel shops run by Everest.
The company plans to increase the number of shops to 120 by the end of this year, which is expected to provide more than 1,200 jobs, he said.
The company reported net income of NT$110 million last quarter, or NT$0.25 per share, up 41.02 percent from NT$78 million a year ago. The figure dropped 9.91 percent from the previous quarter’s NT$2.32 billion.
Everest shares rose 1.39 percent to NT$18.25 in Taipei trading yesterday, while the TAIEX gained 1.15 percent.
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