Window coverings supplier Nien Made Enterprise Co (億豐工業) on Wednesday reported that net profit for the second quarter of this year was flat from a year earlier.
It said that cross-border operations, delivery time management and freight rates would remain under pressure in the second half of the year due to global container shortages and shipping delays.
The Taichung-based company said the April-to-June period was challenging due to the effects of rising raw material prices, higher shipping costs and unfavorable foreign exchange rates. It said that operations at its Cambodian plants remained largely normal despite the spread of COVID-19.
Photo courtesy of Nien Made Enterprise Co
The company — whose product portfolio includes venetian blinds, shutters and shades — nonetheless said that it is paying close attention to the COVID-19 outbreak in Cambodia, where slower hiring could cause uncertainties affecting its shipments of ready-made window coverings.
Nien Made has production bases in China — in Dongguan and Shandong Province — as well as in Cambodia. The company supplies custom-made products from Chinese plants and ready-made products from Cambodian plants.
The company reported that net profit for last quarter increased 1.49 percent year-on-year to NT$1.22 billion (US$43.9 million), while earnings per share grew slightly to NT$4.18, up from NT$4.12 a year earlier.
Consolidated revenue expanded 23.67 percent to NT$7.42 billion last quarter, thanks to better prices for custom-made products and an improved product mix, the company said.
Gross margin declined to 53.92 percent, compared with 57.95 percent a year earlier, due to rising raw material costs and foreign exchange losses.
Operating margin fell 4.16 percentage points year-on-year to 26.36 percent due to greatly increased shipping costs, it said.
In the first half of the year, net profit increased to NT$2.51 billion from NT$2.02 billion a year earlier, with earnings per share growing by NT$1.65 to NT$8.56. Consolidated revenue expanded 33.3 percent annually to NT$14.21 billion, although gross margin fell 1.04 percentage points to 53.82 percent due to headwinds from cost increases, the company said.
Looking ahead, Nien Made said it would make good use of its newly expanded production lines in Dallas, Texas, and is expanding its Mexican facility to alleviate the impact of a global container shortage.
The company would also raise prices of its custom-made and ready-made window coverings in the second half of the year to partially offset the cost pressure, it said.
Yuanta Securities Investment Consulting Co (元大投顧) said Nien Made’s revenue would increase by 10 percent year-on-year in the second half of the year and maintain the same growth momentum next year, thanks to robust consumption of window coverings amid a strong housing demand in the US.
“Given the strong demand for new and existing homes in the US and consumers shifting focus to home repairs amid the pandemic, US window covering retail sales grew 6 percent year-on-year in the second half of last year, and rose 33 percent in the first half of this year,” Yuanta said on Thursday.
“This is evidence of Nien Made’s steady market-share expansion in the US amid the pandemic,” Yunata said.
“The low US mortgage rate of 2.8 percent to 3 percent, before the US Federal Reserve’s potential interest rate hikes in 2023, is a major housing demand driver,” Yuanta said.
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