Annual operating profit at the China-based group Mainland Headwear declined by 28 percent to HK$190.2 million (€22.5m) from HK$264.1 million for the 12 months ended Dec. 31. Ebit fell by 29 percent to HK$177.2 million (€21.0m) as profit attributable to shareholders tumbled by 40 percent to HK$117.9 million (€14.0m). Meanwhile, annual revenues slipped by 24 percent to HK$1.42 billion (€167.9m) from HK$1.87 billion. The FY gross margin contracted by 40 basis points to 33.6 percent.
Mainland Headwear’s manufacturing revenues declined by 27 percent to HK$821.8 million (€97.2m) as its trading sales fell by 20 percent to HK$597.2 million (€70.7m). The group’s largest customer accounted for 42.2 percent of the company’s sales, or HK$598.7 million (€70.8m). Regionally, sales declined in all regions, led by a 25 percent drop in the US to HK$1.23 billion (€145.5m) and a 43 percent dip in China to HK$9.5 million (€1.1m). In Europe, annual sales slid by 5.2 percent to HK$149.4 million (€17.7m).
Despite the significantly lower sales in both the US and Europe, attributed to excess inventory in both regions, the company worked diligently to improve the operational structure of its factory network last year. The effort included reducing production costs through automation and building a new factory in Sonora, Mexico, specializing in quick-turn orders and new product segments while lowering logistics costs and tariffs on US orders. It intends to expand its workforce to 1,000 from 100 at the end of 2023 and generate a monthly production capacity of 1 million units. Mainland’s Shenzhen facility in China will continue to focus on designing, developing and producing premium headwear products, while the company’s Bangladesh factory will remain focused on large-volume orders.
