While reporting lower profit margins, Shenzhou International warned that its overall annual production capacity will be reduced by one to two percentage points for every 14 days of anti-pandemic measures being taken. The leading Chinese sportswear manufacturer arranged vaccinations for its workers in Cambodia, allowing them to return to work after a Covid flare-up that blocked its local factories for about a month between April and May. It has now pledged to strengthen prevention control in Vietnam following the restrictions imposed there since July 19.
Shenzhou, whose clients include Nike, Adidas and Uniqlo, revealed that its top four customers accounted for 84 percent of its sales in the first half. The company’s total revenues went up by 11 percent to 11.37 billion yuan renmimbi (€1,480m-$1,760m) during the period, with an increase of 12 percent to RMB 2,142 million (€279.4m-$331.5m) in Europe. The company also reported gains of 21 percent in the U.S., 15 percent in Mainland China and 3 percent in Japan. The European market was second only to China.
Accounting for 71 percent of revenues, sportswear sales grew by 7 percent during the period, but casual apparel rose at a faster rate of 15 percent, driven by the Chinese market. Lingerie and Other Knitwear went up by 26 percent and 72 percent, respectively.
The group reported a drop of 11 percent in net earnings to RMB 2,226 million (€290.7m-$344.6m) for the first half. The gross margin shrank by 1.2 percentage points to 29.7 percent, due in part to the appreciation of the yuan against the dollar. Government incentives and interest income declined.
