Makalot Industrial Co (聚陽) yesterday reported that its pre-tax profit last quarter grew 5.2 percent on an annual basis, thanks to an improved product portfolio.
The garment make’s pre-tax profit increased to NT$406.65 million (US$13.85 million) from NT$386.52 billion during the same period last year, despite a 7.2 percent annual decline in cumulative revenue to NT$5.13 billion from NT$5.53 billion, due mainly to deferred product deliveries.
Earnings per share (EPS) reached NT$1.94 in the January-to-March period, up from NT$1.87 a year ago, the company’s filing with the Taiwan Stock Exchange showed.
The company has more bargaining power to choose favorable orders from global brand customers this year, a Makalot official said by telephone, citing a business strategy to ensure profitability.
The Taipei-headquartered firm also attributed the improvement of its bottom-line figures to less volatile foreign-exchange rates in the first quarter, compared with the same period last year.
Makalot, whose major customers include Kohl’s Corp and Target Corp, is upbeat about its business outlook for the coming quarters, given an optimistic sentiment in the global apparel industry.
Gross margin is forecast to increase at least 0.5 percentage points this year from last year’s 19.33 percent in light of an improved product portfolio, the company said.
UPSIDE TO TRADE WAR
It could also benefit from the brewing US-China trade war, as more than 90 percent of its products are made outside of China.
“We might see increasing orders, as some brand clients might start to find new suppliers that have overseas production bases besides China,” said the official, who declined to be named.
China accounts for about 40 percent of US garment imports, the official said.
Garments made at its Chinese plant would not be affected by the trade disputes, as they are mainly sold to Japanese customers, the company said.
Makalot’s Vietnamese plant remains its most important production base, contributing 40 percent of its total output, while its Indonesia and Cambodia plants contribute 30 percent and 20 percent respectively.
To meet rising demand, the company said it is expanding its capacity this year with a whole-year output target of 14.2 million dozens of garments, compared with last year’s 13 million dozens.
Makalot’s revenue is forecast to grow 7 percent this year from last year, supported by strong sales growth of two clients, Gap and Uniqlo, Taishin Securities Investment Advisory Co (台新投顧) said in a note.
EPS could grow 19 percent year-on-year to NT$7.35 this year, Taishin added.
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