Mon, Jul 20, 2020 page15

• Fulgent Sun’s profits fall as virus hinders demand

  UNEVEN RETURNS: Although factories and stores have largely reopened, profits have not returned, as Feng Tay and Pou Chen have also reported decreases in revenue

  • By Chen Cheng-hui / Staff reporter
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  Fulgent Sun International Holding Co’s (鈺齊國際) net profit tumbled 42.1 percent year-on-year in the second quarter, after the shoemaker received fewer orders from its brand customers amid the COVID-19 pandemic.

  The Yunlin County-based company on Thursday said it earned NT$171.92 million (US$5.81 million), compared with the NT$296.71 million it made a year earlier. Earnings per share were NT$0.99, down from NT$1.85 a year earlier.

  Fulgent Sun, which supplies sports shoes and functional outdoor shoes to global brands, said profit was affected by clients delaying orders or postponing deliveries, which caused revenue last quarter to drop 29.2 percent annually to NT$2.38 billion, a 14.25 percent decrease from the previous quarter.

  The falling revenue reflected the conservative attitude across the shoemaking industry due to the pandemic, as measures imposed to contain the disease have forced major sportswear brands to close stores and restricted many consumers to their homes.

  Although shoemakers’ factories and brand clients’ stores have largely reopened, business is uneven.

  Earlier this month, Feng Tay Enterprises Co (豐泰企業), another contract shoemaker, reported that revenue last quarter decreased 11.7 percent annually and 12.1 percent quarterly to NT$15.93 billion.

  Pou Chen Corp (寶成工業), the world’s largest maker of sports shoes, posted an annual decline in revenue of 21.6 percent for the second quarter, but a 6.6 percent quarterly increase to NT$63.398 billion.

  In a statement, Fulgent Sun said its operations in China, Vietnam and Cambodia have returned to normal, and its major markets, such as Europe and the US, have begun to reopen in the past few weeks, but the company was cautious about its business outlook.

  “Future operating performance still depends on the performance of the end-market demand, the effect of disease control and the degree of economic reopening,” Fulgent Sun said.

  “No matter what the outbreak situation is, the global outdoor sports and leisure trend is still the same, especially as people feel the importance of living a healthy life after being deeply disturbed by the coronavirus and having to adjust their lifestyle,” it said.

  A bright spot in the company’s latest results was its gross margin and operating margin, which grew by 4 percentage points and 1.3 percentage points from a year earlier to 19.9 percent and 9.8 percent last quarter respectively.

  “It is obvious that the second quarter of this year did not register the same pattern of low profitability seen in the second quarter of previous years,” Fulgent Sun said.

  Overall, the company posted cumulative revenue of NT$5.15 billion in the first half of the year, down 13.2 percent year-on-year, but gross margin and operating margin improved by 4.5 percentage points and 2.2 percentage points to 22 percent and 11.4 percent respectively over the same period.

  Net profit in the first half was NT$526.07 million, up 4.8 percent year-on-year, the highest for the same period in the company’s history, with earnings per share of NT$3.01, it said.

  Fulgent Sun shares on Friday fell 1.34 percent to NT$110.5. The company’s stock has dropped 17.54 percent so far this year, underperforming the 1.54 percent rise on the main exchange, Taiwan Stock Exchange data showed.
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