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Weiqiao Textile effectively curbs downward profit trends

07
Sep '09
The Board of Directors (the “Board”) of Weiqiao Textile Company Limited (the “Company” or “Weiqiao Textile”), the largest cotton textile producer in China, is pleased to announce the interim results of the Company and its subsidiaries for the six months ended 30 June 2009.

The revenue of the Group amounted to approximately RMB6, 380 million for the six months ended 30 June 2009, representing a decrease of 28.2% over the same period last year, which was mainly attributable to the impact of the global financial crisis on the PRC textile industry and the shrinking overall export demand, declining export orders and revenue from exports, resulting in the decrease in the overall turnover.

Net profit attributable to equity holders of the Company was approximately RMB395 million, representing an increase of 44.7% over the same period last year. The increase in net profit attributable to equity holders of the Company was primarily due to the revenue derived from the sales of electricity and steam and the decrease in cost incurred for the Period. Earnings per share were RMB0.33. The Board recommended no payment of the interim dividend for the six months ended 30 June 2009.

Commented on the Group's interim results, Ms. Zhang Hongxia, Chairman of Weiqiao Textile, said, “During the first half of 2009, the operating environment of the PRC cotton textile industry remained challenging. Despite those favorable measures taken by the Chinese government alleviated, to a certain extent, the operational pressure on the PRC textile industry, the shrinking export demand and slowdown in domestic demand have had an adverse impact on the entire PRC textile industry and the Group. By consolidating business development, strengthening internal management and cost control, optimizing resource allocation, adjusting product mix in accordance with market demand and securing its market share through the establishment of a stable customer base, the Group effectively curbed the downward profit trends.”

During the first half of 2009, the production of cotton yarn, grey fabric and denim was approximately 291,000 tonnes, 550,000,000 meters and 54,000,000 meters, representing decreases of approximately 31.0%, 26.8% and 38.6% respectively over the same period last year. Such decline was primarily due to the shrinking export market demand and the decline in the amount of export orders under the impacts of the global financial crisis. Meanwhile, customers had become more selective and had higher requirements on the products. Hence, the Company took measures to lower the rotation rate of equipment to ensure product quality, which affected the production output. In addition, as a result of high turnover rate of staff, it takes some time for new employees to master relevant skills. With the scale of the Group grew, more workers from other regions were employed and the extension of Chinese New Year holidays for staff by the Group also partly affected theproductivity.


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