Production volume of cotton yarn & grey fabric up, Weiqiao Textile

23 Aug '10

5 min read

“However, the PRC textile industry may also benefit from a number of favorable factors. The external economic environment has been picking up gradually with rising demand while the domestic market grows steadily. The continuing structural changes and transformation, and the operational advancement would generate opportunities to the PRC textile industry."

Business Review
During the Period under Review, the overall textile industry of the PRC resumed growth driven by gradual recovery of the global market and stable growth of the domestic market. The Group continued to consolidate its business growth by strengthening internal management and cost control, optimizing resources allocation and adjusting product mix according to market demand. Leveraging on the solid customer base of the Group, the Group successfully secured its large market share and achieved satisfactory operating results.

Cotton yarn, grey fabric and denim are key products of the Group. The proportions of revenue generated from the sales were approximately 46.8%, 46.4% and 6.7% respectively.

For the six months ended 30 June 2010, the proportion of revenue generated from grey fabric increased as compared with the same period of last year, which was primarily due to the increase in sales volume of grey fabric while the unit price of all the above three types products of the Group increased; whereas the proportion of revenue generated from the sales of denim decreased as compared with the same period of last year, which was mainly due to decrease in denim production volume as a result of the phasing out of some backward denim production facilities in the Weiqiao production base by the Group.

Selling and Distribution Expenses
For the six months ended 30 June 2010, the Group's selling and distribution costs increased by approximately 4.7% from approximately RMB129 million in the same period of last year to approximately RMB135 million. Of which, transportation costs grew by approximately 3.0% from approximately RMB101 million in the same period of last year to approximately RMB104 million, which was mainly due to the slight increase in transportation fee as a result of the growth in sales volume of the Group during the Period.

Sales commission amounted to approximately RMB11 million, representing an increase of approximately 57.1% over approximately RMB7 million in the same period of last year, which was primarily due to the increase in the revenue of the Group generated from exports.

Administrative Expenses
For the six months ended 30 June 2010, the Group's administrative expenses were approximately RMB102 million, representing an increase of approximately 8.5% as compared with approximately RMB94 million for the same period of last year.

Finance Costs
For the six months ended 30 June 2010, the Group's finance costs decreased by approximately 13.0% to approximately RMB240 million as compared with approximately RMB276 million over the same period of last year, which was primarily due to the corresponding decrease in the interest expenses of the Group as a result of the decrease in the interest rate of bank borrowings.

Weiqiao Textile Company Limited

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