Mon, Apr 20, 2020 page16

• Fulgent Sun operating income up 35.8 percent in Q1

  • By Chen Cheng-hui / Staff reporter
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  Fulgent Sun International Holding Co (鈺齊國際), which supplies sports shoes and functional outdoor shoes to global brands, on Friday reported that operating income in the first quarter rose 35.8 percent year-on-year to NT$356.38 million (US$11.84 million).

  Gross margin and operating margin improved by 4.2 percentage points and 2.7 percentage points to 23.8 percent and 12.9 percent respectively, the company said in a statement.

  Net income increased 72.5 percent year-on-year to NT$354.14 million, hitting a record high, with earnings per share of NT$2.02, while revenue grew 7.6 percent to NT$2.77 billion, it said.

  “First-quarter revenue, operating income and net income all hit new highs for the same period in the company’s history. The increase in operating profit has also been greater than the increase in revenue for five consecutive quarters, demonstrating the results of management efficiency and economies of scale,” the statement said.

  Fulgent Sun operates three plants in China, two in Vietnam and one in Cambodia.

  The COVID-19 pandemic had led to delays in the restart of plants in China and reduced shipments in February and last month, Fulgent Sun said.

  The company also faced challenges in the flow of people, logistics and transportation after the rapid spread of the coronavirus late last month forced governments to tighten measures to contain it, the company said.

  “However, with multibrand orders, decentralized production bases, product mix optimization and better production efficiency, first-quarter operating performance and financial indicators were still able to grow against the industry’s trend and set a number of records for the same period,” the company said.

  Fulgent Sun said it continued to add capacity to its facilities outside China in a bid to diversify risks, with operations in China, Vietnam and Cambodia accounting for 27.7 percent, 43.2 percent and 29.1 percent of its production capacity respectively in the first quarter.

  That indicated non-China production had contributed more than 70 percent to the company’s total capacity, and Cambodia’s capacity has surpassed China’s for the first time, it said.

  Still, the pandemic has affected global economic activity, disrupted the company’s production and sales, and led to a conservative attitude by brand customers in placing orders, Fulgent Sun said.

  The business outlook for the next few months would depend on global epidemic control and end-market demand, it said.

  Meanwhile, contract shoemaker Feng Tay Enterprises Co (豐泰企業) on April 10 reported net income of NT$1.28 billion for the first quarter, down 13 percent year-on-year, with earnings per share of NT$1.75. Consolidated revenue grew 7.01 percent year-on-year to NT$18.097 billion.

  Yuanta Securities Investment Consulting Co (元大投顧) holds a conservative view on the company’s outlook this year, citing demand slowdown in the US and Europe, production disruptions in China and India, as well as the NBA suspending its season, which is likely to affect sales growth of Nike Inc’s basketball shoes.

  “We expect second-quarter and third-quarter sales to fall up to 5 percent and 2 percent year-on-year [respectively], as Nike is likely to cut orders due to lockdowns in the US and EU markets in the second quarter, implying there will be some inventory buildup afterward,” Yuanta said in a note on Tuesday last week.
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