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H1 net plunges 21.1% at Chinese textiles producer Weiqiao
27
Aug '14
In the interim results released for the first six months of 2014, net profit at the biggest cotton textiles producer in China, Weiqiao Textile Company Ltd plunged 21.1% over first six months of 2013.

Net profit at Weiqiao Textile slipped to RMB 210 million in the first half of 2014, down 21.1% over the corresponding period of last year.

In the period January to June 2014, revenue too fell to RMB 5,973 million, a decline of 10.9% from the first half of 2013.

In the half-year under review, gross profit totalled to RMB 506 million, also down 15.9%, from a year earlier. Gross profit margin too fell 0.5 percentage points to 8.5% year-on-year.

Weiqiao said it recorded a year-on-year decrease in sales volume of cotton yarn and grey fabric as well as lower average selling price, leading to a drop in revenue and net profit, primarily impacted by changes in China’s cotton reserves policy.

During the first half of 2014, cotton yarn, grey fabric and denim contributed 34.0%, 52.4% and 13.6%, respectively to Weiqiao’s revenues.

For six months ended 30 June 2014, Weiqiao was able to reduce selling and distribution expenses by RMB 80 million or 22.3%, mainly by reduced transportation costs. Sales staff salaries and sales commissions also fell 35.3% and 50.0%, respectively.

All the declines in selling and distribution expenses are attributed to lower sales volumes and resultant fall in revenues in the period, Weiqiao admitted.

However, finance costs surged 23.9% year-on-year to RMB 268 million in first six month of 2014, mainly from interest expenses heaving 20.8% from a year earlier.

The textile group said it will optimize its product portfolio towards middle to high-end products and boost operational efficiency, both of which will allow it to respond to changes in both domestic and overseas markets.

Weiqiao Textile has four plants and employs around 83,000 people. As of June 30 2014, it produced around 208,000 tons of cotton yarn, 474,000,000 meters of grey fabric and 37,000,000 meters of denim.

Fibre2fashion News Desk - India

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