Makalot Industrial Co (聚陽), a garment manufacturer for global clothing brands, yesterday said it expects sales to grow by between 5 and 10 percent this year, aided by orders from new brand customers.
Sales could achieve double-digit percentage growth this quarter, as seven new customers are expected to make a significant contribution, a Makalot investor relations official said by telephone.
The new customers include Swedish fashion brand H&M and Brazilian soccer brand Athleta, company data showed.
The second half is the high season for garment makers.
Average selling prices are forecast to stay flat from last year’s US$57, Makalot said.
The official, who declined to be named, said the firm is relatively conservative about its profitability this year, citing foreign exchange rate fluctuations.
“The sharp appreciation of the New Taiwan dollar [against the US dollar] is likely to weigh on this year’s gross margin,” the official said.
Sales to US customers make up nearly 80 percent of total revenue, while sales to Japan contribute 20 percent, company data showed.
HSBC Global Research also expressed concerns about the outlook for the firm’s margin, as the margin for sportswear and quick replenishment orders have become slim compared with three years ago.
“We think it would be challenging for Makalot to return to its 23 percent gross profit margin level of 2015,” due to fierce competition in the global apparel industry, HSBC analyst John Chung wrote in a report published earlier this month.
The firm’s gross margin was 20.42 percent last year, a company filing with the Taiwan Stock Exchange showed.
Makalot said it has set up several pilot “smart” production lines in Vietnam and Taiwan to improve efficiency, adding that the latest 3D fitting technologies could significantly help it to reduce labor costs.
Taipei-based Makalot has 33,000 employees worldwide, company data showed.
Makalot yesterday posted a net profit of NT$657 million (US$21.63 million) for the first half, a 42.7 percent year-on-year decrease that the company attributed to slowing demand from its customers and mounting foreign exchange rate losses of NT$60 million due to a strong NT dollar.
From January through last month, aggregate sales declined 6.3 percent year-on-year to NT$10.2 billion, the firm said.
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