Wed, Apr 19, 2017 - Page 12 News List

Makalot optimistic despite plunging profits, slow sales

By Kuo Chia-erh  /  Staff reporter

Makalot Industrial Co (聚陽實業), a garment manufacturer for global clothing brands, yesterday reported a pre-tax profit of NT$386.5 million (US$12.7 million) for last quarter, a 50.7 percent plunge from the same period last year, dragged by slowing sales and foreign-exchange losses.

Pre-tax earnings per share were NT$1.87 in the January-to-March period, compared with NT$3.94 per share in the same period last year, the company said in a statement.

In the first three months, accumulative revenue fell 12.3 percent from NT$6.31 billion to NT$5.53 billion, the statement said.

“The sharp appreciation of the New Taiwan dollar against the US dollar eroded the company’s profitability [last quarter],” a Makalot investor relations official said by telephone.

The official said the company was hurt by foreign-exchange losses of nearly NT$50 million.

Despite the gloomy figures, the company expects a seasonal pickup in sales to begin this quarter and maintain for the rest of the year on the back of recovering demand in the global apparel industry.

The company last month reported a 4.12 percent year-on-year decline in revenues to NT$2.11 billion, which represented its 13th consecutive month of annual declines in sales, a company filing with the Taiwan Stock Exchange showed.

However, the scale of the annual decline narrowed from the previous month’s 8.57 percent, the data showed.

“We added seven new brand customers last year, which would make contributions to the company’s sales in the coming quarters,” the official said.

This year, the garment maker is anticipated to secure new orders from two European clients and one from Japan, it said.

Revenue from the US accounts for nearly 80 percent of the company’ total sales, while sales in Japan contribute 20 percent, company data showed.

Asked about its capacity plans, the Taipei-headquartered company said it is building new production lines at its Vietnamese and Indonesian plants, which would lift its overall capacity by 10 percent this year.

Makalot is capable of producing 13 million units of clothes per month, company data showed.

Following the company’s business strategy of sustaining its price competitiveness, the ongoing capacity expansion projects eye the potential zero-tariff benefits brought by Vietnam’s free-trade agreement with the EU.

Vietnam’s apparel exports to the EU are to be exempt of tariffs from next year, compared with the current tax rate of nearly 12 percent, Makalot said.

Makalot shares rose 1.23 percent to close at NT$123 in Taipei trading ahead of the earnings statement, surpassing the benchmark TAIEX, which edged up 0.31 percent to 9,746.56 points.

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