Fu Sheng Industrial Co (復盛應用), a leading producer of gold club heads, said it expects gradual revenue growth in the second half of the year, when it is to expand production capacity in Vietnam and receive new orders from golf equipment brand Titleist.
The company this year plans to invest more than US$20 million to increase its Vietnamese factories’ revenue contribution to 50 percent, compared with 35 percent last year, Fu Sheng spokesperson Hsu Ting-yi (許廷儀) said at a sales presentation in Taipei on Wednesday.
Fu Sheng has moved some of its production lines to Vietnam, where labor costs are 40 percent less than China, Hsu said, adding that production efficiency has gradually improved over the past few years
“The installation of about 60 automated facilities in our Vietnamese factories will help lower production costs, starting this quarter,” Hsu said.
Fu Sheng molds and cuts club heads in Taiwan, and sends them to China and Vietnam for machining, polishing and painting.
Its operations in China accounted for 65 percent of overall revenue last year, the company said.
First-quarter revenue fell 0.1 percent year-on-year to NT$4.21 billion (US$136.2 million) from NT$4.22 billion.
Normally the first and fourth quarters are high seasons for Fu Sheng, but Hsu attributed last quarter’s flat performance to clients’ order adjustments.
Club heads, which have a higher gross margin than the firm’s other products, contributed to 83 percent of sales last year, compared with aviation and vehicle components at 5 percent, and carbon fiber club heads and club head accessories at 4 percent.
Orders from Titleist are expected to help boost revenue this year, Hsu said.
Orders from other clients such as Callaway Golf Co and PING Golf seem steady, he said.
Revenue for this quarter is forecast to be flat from last quarter, but the company’s performance this year would be “not as bad as last year,” he added.
The global golf market is predicted to grow by 2 to 3 percent annually over the next five to six years, with the US taking the lead at 46 percent and Japan with 24 percent, the company said.
Fu Sheng has not yet released its bottom line results for the first quarter.
The company reported net profit of NT$2.01 billion for last year, up 44.97 percent year-on-year, with earnings per share of NT$16.85.
Gross margin improved to 24.59 percent from from 23.7 percent a year earlier, while revenue rose 32.44 percent year-on-year to NT$14.86 billion.
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