Shenzhou International Group Holdings, one of the major Chinese apparel manufacturers, reported nearly flat earnings and slightly higher sales for the year ended Dec. 31, thanks in part to its diversification into the manufacture of face masks, which were sold in large quantities in Japan. Its sales of sportswear, which represented 69.2 percent of its revenues, fell by about 2.3 percent due to faltering demand in the U.S. and Europe.

Shenzhou’s total revenues increased by 1.6 percent to 23,030 million yuan renmimbi (€2,989m-$3,337m), and they were up by 3.7 percent excluding the retail business that was discontinued by the group at the end of 2019. Its sales of casual apparel declined by 16.8 percent, making up 19.5 percent of its total revenues. Lingerie products went up by 28.7 percent. Other knitwear revenues –consisting mainly of masks - jumped by 931.9 percent, accounting for 6.8 percent of the turnover.

The group’s sales in Mainland China rose by about 3 percent to RMB 7,323 million (€950m-$1,114m), as the domestic demand for apparel rebounded after the lockdown measures were lifted. Sales in the rest of the world grew by about one percent overall, but Japan overtook the European Union as the main destination, growing by 35 percent thanks to heavy sales of masks and lingerie. In the EU and the U.S., sales declined by 5 percent and 10 percent, respectively, down to RMB 3,679 million (€447m-$559m) and RMB 3,115 million (€404m-$474m).

The group’s net income rose marginally to RMB 5,106.7 million (€663m-$777m) from RMB 5,095.2 million. The appreciation of the yuan helped to raise the gross margin by 0.9 percentage points to 31.2 percent, more than offsetting higher costs for labor and pandemic mitigation. Administrative expenses increased by 6 percent, but selling and distribution costs dropped nu 61 percent.