Makalot Industrial Co Ltd (聚陽實業), a manufacturer of ready-to-wear apparel and functional clothing, on Tuesday said that it aims to increase investment in Indonesia after the output growth of its Vietnamese plants slowed.
“We plan to increase the output of our plants in Indonesia by 15 percent next year, compared with the company’s total output growth of about 10 percent,” Makalot chairman Frank Chou (周理平) said after a shareholders’ meeting in Taipei.
“We expect Indonesia to become our largest manufacturing site in the coming years,” Chou said, adding that a factory in Demak Regency is scheduled to start operations in June next year with an annual output of 750,000 articles.
Shipments from Makalot’s Indonesian plants to major markets such as the US would take 10 more days compared with deliveries from Vietnam, but an improved supply chain and better infrastructure could solve the problem, he said.
Last year, Vietnam remained Makalot’s largest production base, contributing 37 percent of total output, compared with Indonesia’s 33 percent, Cambodia at 20 percent and 10 percent for China and Africa, Chou said.
Vietnam possesses several advantages, such as less shipping time to major markets, proximity to sources of materials such as China and lower tariffs on its products, he said.
However, labor and land costs have been rising in the country over the past few years, partly due to an ongoing US-China trade dispute, he added.
“Our output from Vietnam has slowed and would reach an average of 5 percent annual growth,” Chou said.
Yet, Makalot plans to continue investing in Vietnam, as it has received orders diverted from China this year and has gained new sports clothing clients, which would lead to greater orders and sales for this and next year, he said.
Sports clothing vendors are expected to make up more than 40 percent of its clients next year, the company said.
Makalot reported that revenue for last month jumped 40.31 percent year-on-year to NT$2.06 billion (US$65.71 million).
In the first five months of this year, cumulative revenue climbed 28.99 percent to NT$10.6 billion, from NT$8.22 billion a year earlier, company data showed.
Shareholders at the meeting approved the company’s plan to distribute a cash dividend of NT$7.1, suggesting a payout ratio of 98.61 percent based on last year’s earnings per share of NT$7.2.
The company reported first-quarter earnings per share of NT$2.32, up from NT$1.53 a year earlier, while gross margin increased 0.79 percentage points to 2.32 percent in the period.
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