Footwear manufacturer Pou Chen Corp (寶成工業) this week reported a net income of NT$5.17 billion (US$164.38 million) for the first half of the year, up 8.2 percent on a yearly basis on the back of steady growth in its shoemaking business.
Aggregate sales in the first six months increased 6 percent annually to NT$140.75 billion, while gross margin improved 2.1 percentage points to 25.2 percent, the company said in a statement.
“The growth in revenue mainly came from the shoemaking business, but sales from the retail business grew more quickly,” a Pou Chen investor relations official said by telephone yesterday.
The shoemaking business saw sales rise 3.4 percent to NT$98.7 billion from the previous year, making up 70 percent of the company’s total sales in the first half, while retail sales increased 12.4 percent annually to NT$41.6 billion over the same period, thanks to successful expansion in China, Pou Chen said.
The smooth adjustment of production lines in China and the rising trend of the athletic fashion helped increase the group’s operational profit, Yuanta Securities Investment Consulting Co (元大投顧) analyst Peggy Shih (施姵帆) said in a research note on Tuesday.
Yuanta is optimistic about the company’s performance in the second half of this year, citing a significant improvement in the gross margin of its shoemaking business.
Gross margin of Pou Chen’s original-equipment manufacturing (OEM) is expected to return to the 20 to 20.5 percent level this year, Shih said, adding that margins for its retail business would improve from the previous year.
As one of the world’s largest contract footwear manufacturers, Pou Chen produces more than 300 million pairs per year, according to the company’s Web site.
The company takes up about 20 percent of the entire wholesale value of the global branded athletic and casual footwear market, supplying products for Nike Inc, Adidas AG, Under Armour, New Balance and Timberland LLC.
Pou Chen said that instead of building new factories it plans by the end of this year to increase automation of its product lines to expand manufacturing capacity and manage labor costs, including at plants in Vietnam and Cambodia.
Pou Chen shares yesterday gained 0.22 percent to close at NT$45.6, Taiwan Stock Exchange data showed.
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