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Weiqiao Textile posts excellent gross profit margins
Mar '11
The largest textile enterprise in Asia, Weiqiao Textile Company Limited registered an impressive growth rate of 16.1 percent in gross profit margin in 2010.

According to the statistics of China Chamber of Commerce for Import & Export of Textiles, Weiqiao Textiles ranked first among the country's textiles and clothing export enterprises in terms of export value in 2010.

Climbing on the world economic recovery, the company surpassed gross profit margins of the last three years. It had recorded gross profit margins of 14.3 percent, 8.7 percent and 8.7 percent in 2007, 2008 and 2009 respectively.

Company earned 61.7 percent of its income from Mainland China in 2010. In 2009, the share of Mainland China was 64.9 percent. In exports, company got some new orders showing better results.

Recovery in overseas markets and market demand helped the company in a great way, improving its trade with Japan, South Korea, Southeast Asia, the United States, Europe, Taiwan and Africa substantially.

In last ten years, cotton prices touched new heights but the company benefited significantly due to higher demands of its products. As the demand for textile products improved in global textile market, prices of company's products went upwards resulting in great improvement of the company's gross profit margin.

Company's main products are cotton yarn, fabric and denim fabric. In 2010, Weiqiao produced 720,000 tons cotton yarn and 1.307 billion meters fabric recording a growth of 11.1 percent and 10.2 percent increase y-o-y, respectively.

In denim fabrics segment, company registered negative growth rate of 2.9 percent with production of 102 million meters.

The denim production declined as a result of technology up-gradation. Weiqiao had started eliminating some outdated machineries in denim production and that affected the production.

As per company's analysis, slow global economic recovery and increasing inflationary pressure may harm the textile market. Excessive liquidity too is a problem. Under this macro context, textile market faces more complex internal and external environment with increased uncertainty. In all these circumstances, operation will be more difficult in the future for the textile sector.

Fibre2fashion News Desk - China

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