Feng Tay Enterprises Co (豐泰企業), a key supplier to Nike Inc, plans to expand capacity in India, Indonesia and Vietnam by 7 to 10 percent this year to counter lingering US-China trade tensions.
Last year, Vietnam accounted for 52 percent of the firm’s total output, while India contributed 25 percent and Indonesia 13 percent.
Output from the three countries is expected to increase in the second half of this year, a public relations official told the Taipei Times by telephone on Friday last week.
Feng Tay expects shoe production this quarter to increase 9 percent annually and 6 percent quarterly to 3.15 million pairs, while shoe sales should grow 9 percent annually and 5 percent quarterly to 3.24 million pairs.
“We have retained our shoe sales forecast for this quarter, despite the new US tariffs,” said the official, referring to Washington’s additional 10 percent tariffs on US$300 billion of Chinese imports from Sept. 1.
“The consequences of the new tariffs might be limited, as our Chinese plants, which mainly make high-value-added products, only accounted for 11 percent of last year’s total output,” said the official, who asked to remain anonymous.
She declined to say whether the company would adjust its average sales prices because of the additional tariffs.
Analysts also expect the tariffs to have only a limited impact on Taiwanese textile and shoe makers, as many of them have moved capacity to ASEAN members, including Vietnam.
Feng Tay “can continue to benefit from orders transferred from China to plants in Southeast Asia,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Friday.
The company reported that shoe sales in the first half of this year grew 8.2 percent year-on-year to 5.93 million pairs, which led to record revenue of NT$34.97 billion (US$1.11 billion), up 14.79 percent annually.
Sneakers remained its main product in the first half, contributing about 86 percent of overall sales, while casual shoes and sporting goods made up 10 percent, it said.
Net profit in the first six months soared 30.04 percent year-on-year to NT$3.11 billion, or earnings per share of NT$4.24, thanks to growth in the company’s core business and foreign-exchange gains, it said.
Separately, cotton textile and polyester supplier Tainan Spinning Co (台南紡織) plans to install five new machines at its plant in Vietnam’s Dong Nai Province. Production of high-quality open-end yarns would begin in the first quarter of next year.
A new production line at the company’s plant in Tainan’s Sinshih District (新市), which focuses on special polyesters, is scheduled to start operations in the fourth quarter, a company official said on Wednesday last week.
The planned expansion would help Tainan Spinning meet demand that is expected to increase in the second half of this year, even though the company’s downstream customers mostly stayed on the sidelines in the first half due to concern over the US-China trade dispute, the official said.
Tainan Spinning expects business this quarter to grow compared with last quarter, although overall performance is expected to remain static compared with the third quarter last year, he said.
The company said that it expects lower profits this year, compared with last year, as cotton prices have fallen more than 30 percent since the middle of last year and the outlook for raw material prices remains bleak.
The company reported that revenue in the first half fell 6.9 percent year-on-year to NT$11.62 billion, from NT$12.48 billion a year earlier.
The company has yet to release its bottom-line results for the second quarter, after seeing net profit in the first quarter fall 82.8 percent to NT$28.11 million.
Tainan Spinning also has a shopping mall business in Tainan and has invested NT$3.2 billion this year on building new shopping facilities at the T.S. Mall (南紡購物中心), the company said.
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