Upsurge in fixed cost investment and labor cost undermined profit in short run
Hong Kong, Mar 25, 2014 - (ACN Newswire) - Grand Concord International Holdings Limited ("GCI" or the "Group", Stock Code: 844), the leading functional fabric and innerwear manufacturer in China, is pleased to announce its audited consolidated results of the Group for the year ended 31 December 2013 (the "year under review").
Operating performanceDuring the year under review, the Group has achieved solid growth in sales of knitted fabrics and innerwear products despite the challenging global economy and slow growth in international textile market in 2013, the Group recorded a revenue of RMB543.8million in 2013, surged by 14.3% over 2012 (2012: RMB475.8million); while the gross profit of the Group slightly increase by 4.9% to RMB121.8million from 2012 (2012: RMB116.1million). However, during the year under review, the Group continued to optimize its production model and invested in environment friendly and technologically advanced production equipment, so as to enhance the automation level and improve the division of labour in different production processes, resulting in a substantial increase in fixed costs of production, coupled with the impact of appreciation of RMB and depreciation of yen and USD that undermined our cost competitiveness, rising labor costs in the PRC and intense competition from Southeast Asia market with lower production cost, the Group's profit for the year severely dropped by 31.3% from RMB35.5million in 2012 to RMB24.4million in 2013. Whereas, we believe the enhanced production capabilities will benefit product competitiveness in the long run. In consideration of reserving capital for enhancement of production capability and expand overseas market, the Board has resolved not to distribute a final dividend for the year ended 31 December, 2013 (2012: HK 3.5 cents per share).
The overall sales performance of the Group in 2013 was satisfactory particularly that of functional fabrics and innerwear products. The Group's revenue from sales of knitted fabrics and innerwear amounted to approximately RMB183.1 million and RMB360.7 million respectively, representing a year-on-year growth of approximately 16.9% and 13.0%, fully reflecting the support of the customers from various markets to the Group. The sale volume of general fabrics, functional fabrics, general innerwear and functional innerwear for the year ended 31 December 2013 were approximately 200 tons, 2,176 tons, 11.4 million pieces and 14.8 million pieces respectively (2012: approximately 169 tons, 1,710 tons, 10.3 million pieces and 10.9 million pieces respectively).
The continuous stable growth of our targeted "functional" products in 2013 was as a result of our successful sales and marketing strategies, our exclusive right of production and sales from large international brands, the heightened market awareness on the health and environment protection advantages that functional innerwear products can bring to human and last but not least the rising demand on functional innerwear resulting from the increasing participation in leisure and outdoor activities from people all over the world especially residents from the mainland China.
In view of overseas market, despite the Japanese yen depreciation affected our profit margin, the orders from Japan, the United States and China in 2013 remained stable. The Group has reduced the unit price of some merchandise exports in order to retain valuable customers. The Group will continue to seize market demand in United States and Europe apart from Japan.
ProspectLooking forward, Mr. Wong Kin Ling, Chairman of the Group, commented, "The Company is a high-end weaving enterprise with the concept of "Function". It is expected that, in the textile industry in mainland China in the future, the segment with the concept of "Function" will be the one with the highlight of growth for the industry. With the increasing pressure on life and work and the pursuit for a healthy and environment friendly life, the people around the world and Chinese mainland residents increasingly participate in leisure and outdoor sports, and thus drive the growing production and sales of functional fabrics in the world. With the gradually bolstering market demand for such products in the future, it is believed that the Group is able to gain higher bargaining power. In addition, the Group has strengthened automation and intelligent production after fixed investment to productivity, which can help reduce cost pressure and effectively overcome external pressure such as slowdown in growth of external demand, further widened spread between domestic and international cotton prices and rising production costs."
About Grand Concord International Holdings Limited
Grand Concord International Holdings Limited, listed on the Main Board of the Hong Kong Stock Exchange on 24 November 2011, stock code 844, is the leading functional fabric and innerwear manufacturer in China, offering various types of functional fabrics and innerwear for infants as well as adults. Its production is based in Zhucheng, Shandong province in China with an aggregate floor area over 52,000 sq.m. The existing production base has four key production lines in place, namely weaving, dyeing, printing, and cutting and sewing, which form the Group's vertically-integrated business model. In addition, the base also has an in-house R&D, design and testing departments for functional fabric, which are equipped with the worldc-class cutting-edge manufacturing equipment, including the production facilities from Germany, Italy and Japan, so that the Group is able to ensure an effective control over quality and promotes of product upgrade, and ultimately enhances the product competitiveness. GCI strives to grow into one of the leading Chinese functional fabric and innerwear manufacturers for major international apparel brands.
Source: Grand Concord International Holdings Limited
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