Wed, Apr 01, 2020 page12

• Quang Viet forecasts drop in revenue

  ALL ABOUT STRATEGY: The company is optimistic, saying that its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity

  • By Lisa Wang / Staff reporter
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  Quang Viet Enterprise Co (QVE, 廣越), which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, yesterday said that revenue might drop 5 to 10 percent annually this year as some customers trimmed orders in response to the COVID-19 pandemic.

  That would mark its first revenue decline since 2016.

  Quang Viet posted record-high revenue of NT$16.26 billion (US$537.45 million) last year, up 22 percent from 2018. Down jackets made up 40 percent of it revenue last year.

  North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 to 30 percent from a year earlier, Quang Viet president Charles Wu (吳朝筆) told a teleconference.

  Orders from Nike Inc have not been affected by the pandemic, he said.

  Outdoor clothing brand Patagonia is Quang Viet’s second-biggest client after Adidas, contributing 23 percent to the company’s total revenue last year.

  However, Adidas would continue to show strong momentum this year by placing 20 percent more orders than last year, Wu said.

  Adidas contributed 26 percent to the company’s total sales last year, Quang Viet data showed.

  Under Armour Inc would increase orders by 50 percent this year from last year as the sportswear brand is tapping into the down jacket segment, Quang Viet said.

  To cope with slackening customer demand, Quang Viet plans to scale back its capacity expansion in Vietnam and Romania, Wu said.

  The company now plans to build 14 new production lines this year, rather than the 50 lines it had planned in December last year, he said.

  However, Quang Viet plans to speed up its expansion of capacity next year by adding 28 new production lines mainly in Vietnam to support customer demand, Wu said.

  The company remains optimistic about its gross margin this year, which is projected to improve from 15.65 percent last year, he said.

  The 15-day national lockdown in Vietnam from today is expected to have a minor effect on the company’s production, as the industry’s peak season falls in the third quarter rather than the first half of the year, the company said.

  Separately, polyester and textile maker Far Eastern New Century Corp (FENC, 遠東新世紀) posted a 10.8 percent decline in net profit to NT$10.73 billion last year from NT$12.03 billion in 2018, a company filing with the Taiwan Stock Exchange showed.

  Earnings per share fell to NT$2.15, down from NT$2.4 a year earlier, while gross margin shrank to 17.88 percent, compared with 19.41 percent in 2018.

  FENC’s board of directors approved a proposal to distribute a cash dividend of NT$1.5 per share, representing a payout ratio of 69.77 percent, the company said.

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