Garment maker Makalot Industrial Co (聚陽) yesterday reported third-quarter revenue of NT$8.89 billion (US$292.3 million), down 15.06 percent from NT$10.47 billion a year earlier, amid a slowdown in front-loading demand by customers.
The figure is lower than the market consensus estimate of NT$8.94 billion, but 15.61 percent higher than the NT$7.69 billion in revenue for the second quarter.
Last month, revenue fell 28.22 percent year-on-year to NT$2.36 billion, the lowest since April last year, when it posted sales of NT$2.23 billion.
Photo: Taipei Times
Makalot said uncertainties surrounding US tariffs disrupted its shipments this year, while some customers rushed to place orders in the second quarter before Washington’s tariffs came into effect in August.
The company, a manufacturer of ready-to-wear garments and functional sportswear products, counts GAP Inc, Fast Retailing Co’s GU subbrand, Kohl’s Corp, Target Corp and Dick’s Sporting Goods Inc among its major clients.
Makalot had originally expected that shipments in the third quarter would decrease by about 10 percent compared with the second quarter. The actual sales results were roughly in line with its expectations if the exchange rate factor was excluded, company spokesman Henry Lin (林恆宇) told the Central News Agency yesterday.
Cumulated revenue in the first nine months of this year totaled NT$26.5 billion, down 0.99 percent from NT$26.77 billion in the same period last year, company data showed.
Looking ahead, Makalot believes the worst is over and the fourth quarter is expected to be better than it previously expected, Lin said.
Although the impact of tariffs might continue until the end of the year, the negative effect has gradually eased, he said, adding that the company’s internal target for this year is still to see shipments catch up with last year’s level.
However, considering the significant changes in tariffs and exchange rates, Makalot is considering adjusting prices with customers, Lin said.
Last month alone, the average selling price of the company’s products increased by approximately 4 percent compared with the same period last year, he said.
The company is confident that revenue next year would return to the growth track, driven by new orders and the launch of several major sporting events, he added.
The market remains conservative about the company’s profit performance this year, given an uncertain order outlook amid tariff-related disruption, coupled with earnings erosion owing to the New Taiwan dollar’s appreciation against the US dollar and absorption of tariff costs, Yuanta Securities Investment and Consulting Co (元大投顧) said in a note.
The company’s order outlook for next year remains uncertain, as brand customers are expected to raise product prices to pass on tariff costs, which would affect end-market demand, Yuanta said.
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