Textile maker Honmyue Enterprise Co Ltd (弘裕) still aims to break even this year, if profits generated from its weaving plant in Taiwan help cover the expenses of upgrading its two finishing plants, vice president Arjin Chen (陳滄俊) told an investors’ meeting in Taipei yesterday.
The Changhua County-based company runs three weaving plants, which mainly make textiles for industry use.
They are expected to generate steady profits in the second half of the year, Chen said.
The two finishing plants in Taiwan and China are being upgraded and should start contributing to sales next year, he said.
Honmyue is a midstream yarn spinning, fabric and finishing company that provides materials for leather and apparel manufacturers.
To better integrate middle and downstream supply chains, the company in December last year acquired a finishing plant in China’s Zhejiang Province for 50 million yuan (US$7.06 million) and earlier this year purchased Yu Zhan Startup Co Ltd (裕展新創), which owns a finishing plant in Changhua County, for NT$120 million (US$3.91 million).
Due to stricter environmental regulations in Taiwan and China, the two finishing plants are not expected to be ready for operations until next year, Chen said.
Rising expenses from buying new equipment and hiring workers led the company to report net loses of NT$10.59 million in the first half of the year, compared with a net income of NT$27.89 million in the same period last year.
The company reported losses per share of NT$0.08 in the first half, compared with earnings per share of NT$0.21 a year earlier, while gross margin dropped 4.21 percentage points to 7.22 percent, company data showed.
Honmyue is confident that once the two finishing plants are completed, sales of textiles made for garments would grow gradually and help boost profits next year.
The garment sector has a gross margin of 12 to 25 percent, it said.
The company saw sales drop 7.96 percent annually last month and 9.81 percent monthly to NT$262.09 million. In the first nine months, cumulative sales decreased 5.83 percent year-on-year to NT$2.56 billion.
Textiles for industry use accounted for 71 percent of total sales in the first nine months, while textiles for garments made up 18 percent and textiles for home furnishings contributed 6 percent, with medical and other textile products making up the remaining 5 percent, company data showed.
The Chinese market contributed 80 percent of cumulative sales in the first nine months, while Southeast Asia generated 14 percent and its operations in the US contributed 3 percent, data showed.
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