Kingmaker, a major Chinese manufacturer of athletic and casual footwear, posted a net income of 65.5 million Hong Kong dollars (€7.0-$8.5m) for its first fiscal half-year ended on Sept. 30, compared with a loss of HK$32.3 million last year, helped by gains from its property investments that more than offset a decline in its manufacturing business.

Footwear sales fell by 28 percent to HK$391.5 billion (€41.7m-$50.5m). The number of pairs sold declined by 31.9 percent, while average selling prices improved by 10.9 percent, due to a focus on higher-value products and growing brands. The company’s largest customers in the period were Asics, Clarks, Timberland, Dr. Martens and Wolverine, representing 93 percent of the total turnover.

Kingmaker reported a drop in its gross margin of 1.5 percentage points to just 5.4 percent because of smaller orders and their relocation to Vietnamese or Cambodian factories not affected by the U.S. tariffs on imports from China. Three-quarters of Kingmaker’s production is now in Vietnam, with the remainder in Cambodia. The company’s original Chinese facility is exclusively used for R&D.

The company expects continued impacts from the health crisis on its business performance for the remainder of 2020 and into 2021. It said that order forecasts from branded customers have become even more conservative, providing very low visibility for Kingmaker to make capacity plans.