Footwear supplier Pou Chen Corp (寶成工業) on Tuesday last week reported that net income in the first half of the year increased 13.6 percent from the same period last year, due mainly to non-operating gains.
Net income attributable to the parent company totaled NT$4.87 billion (US$158.1 million) in the first six months, up from NT$4.29 billion a year earlier thanks to non-operating gains of NT$3.01 billion, especially NT$2.44 billion in income derived from Nan Shan Life Insurance Co’s (南山人壽) equity and bond investments, Pou Chen said in a statement.
Pou Chen, the world’s largest manufacturer of branded athletic and casual footwear, holds a 18.13 percent stake in Nan Shan. Apart from Nan Shan, the company has investments ranging from shoe manufacturing to footwear retailing, and from electronics to banking and land development.
The capital gains from Nan Shan were NT$1.85 billion higher than a year earlier and helped Pou Chen offset the decline in operating income, which was due to order fluctuations in contract manufacturing and a drive to upgrade its retail business, Pou Chen said.
Pou Chen has been pushing for business transformation to cope with the fast-changing market dynamics. In the first half of the year, its retail business accounted for 40.6 percent of the company’s sales, up from 32.7 percent in the same period last year, while shoe manufacturing comprised about 59.1 percent, sliding from 66.9 percent a year earlier.
Overall sales increased 3.4 percent year-on-year to NT$141.42 billion from NT$136.82 billion a year earlier, company data showed.
Pou Chen said its operating income decreased 24.8 percent year-on-year to NT$6.32 billion in the six-month period, with operating margin falling from 6.1 percent to 4.5 percent.
Gross margin declined from 25.9 percent to 25.5 percent in the period, it said.
In the first half, earnings per share were NT$1.65, up from NT$1.45 a year earlier, it said.
For the second half of the year, Pou Chen’s manufacturing subsidiary, Yue Yuen Industrial (Holdings) Ltd (裕元工業), might continue to see a business downtrend, while its retail business, Pou Sheng International Ltd (寶勝國際), could see gross margin remain under pressure amid rising competition from online shopping in China, Yuanta Securities Investment Consulting Co (元大投顧) analyst Peggy Shih (施姵帆) said in a client note.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
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