Sat, Nov 11, 2017 - Page 12 News List

Eclat revenue falls as plants delayed

AMAZONIAN ADVENTURE:Despite revenue decreasing 2.9%, the company says it has orders for Amazon’s activewear brands and operating permits for Vietnamese factories

By Kuo Chia-erh  /  Staff reporter

Textile and garment manufacturer Eclat Textile Co (儒鴻) yesterday said it anticipates a significant revenue contribution from its two new brand customers next year.

“One of the two new customers is to place a NT$200 million [US$6.63 million] order for textiles next year, while another one plans to purchase nearly NT$400 million worth of garments [from Eclat],” Eclat chairman Hung Chen-hai (洪鎮海) told an investors’ conference in Taipei.

In light of growing customer demand, Hung gave an optimistic business outlook for the first half of next year, saying that the company is likely to see a rebound in sales over the period.

“We expect sales to return to 2015 levels,” he told investors, declining to elaborate on Eclat’s margin outlook and possible product portfolio for next year.

The company posted cumulative revenue of NT$11.09 billion in the first half of this year, representing a 2.88 percent decline year-on-year from NT$11.42 billion in the same period last year. The first-half figure was also 2.97 percent lower than the NT$11.43 billion registered in the same period of 2015.

Commenting on the firm’s ongoing expansion projects, Eclat said its two new garment plants in Vietnam are falling behind schedule, but the firm obtained operating permits for the facilities last month.

Once fully operational, the two Vietnamese plants are expected to make a substantial revenue contribution in the third quarter of next year, the company said, adding that the nearly 80 production lines at the sites are forecast to generate revenue of NT$3 billion per year.

Eclat said it would not build more new garment plants over the next three years, as the company’s core strategy is to pick and choose “favorable” orders instead of blindly expanding.

However, the company is in talks with some of its existing brand customers and is considering to adjust its customer portfolio in response to the emergence of e-commerce retailers in global garment supply chains, Hung said.

US e-commerce giant Amazon.com Inc’s expansion into private-label activewear is beginning to show up on its Web site, with at least two new product lines — Rebel Canyon and Peak Velocity — that appear to be internal brands, Bloomberg News reported on Tuesday, citing analysis by business intelligence firm L2 Inc.

Eclat said the company, as well as local peer Makalot Industrial Co (聚陽實業), have both secured orders from Amazon. The company did not elaborate.

Meanwhile, Eclat is building a digital printing plant in Taiwan to produce more value-added products by deploying the latest printing technologies, in a bid to sustain profitability and to distinguish itself from global competitors.

The Miaoli plant, with a total construction cost of nearly NT$1 billion, is to start production in the third quarter of next year and is expected to add extra value of US$3 to each yard of textile, Eclat said.

Ahead of the investors’ conference, Eclat on Wednesday released financial results for last quarter, which showed that the company’s revenue dropped 2.56 percent to NT$6.1 billion from NT$6.26 billion a year ago and its gross margin fell to 28.4 percent from 28.73 percent.

Net profit over the period grew 8.95 percent to NT$922.07 million from NT$846.34 million, with earnings per share expanding to NT$3.36 from NT$3.1, company data showed.

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