Yue Yuen reported a 171 percent increase in nine-month profit attributable to shareholders of $270.1 million versus $99.6 million. Revenues increased 8.2 percent to $6,971.9 million from $6,441.2 million for the period ended Sept. 30. Ebit was up 101 percent through nine months at $353.4 million, but gross margin was down at 23.8 percent versus 24.2 percent in the comparable 2021 period. But YY said gross margin from its manufacturing segment improved 290 basis points to 18.2 percent due to better operating leverage, improved capacity utilization and production efficiency over the period.
Global manufacturing sales rose 31 percent to more than $4.79 billion, with Europe up 45 percent year-to-date, accounting for 26.6 percent of the total. The U.S. market, up 31.8 percent in revenues year-to-date, represents 34.3 percent of the year-to-date manufacturing sales. The group said it is seeing “resilient demand” for high-end footwear products despite “a softening global demand backdrop.”
By segment, athletic/outdoor shoe sales rose nearly 36 percent to $3,750.3 million; casual shoes/sport sandal revenues increased 19.6 percent to $638.8 million; soles/component/other sales lifted 13.7 percent higher at $404.3 million; and sales from Pou Sheng, its retail subsidiary in Greater China, declined 21.8 percent year-over-year to $2,178.4 million. Pou Sheng did report a small improvement in its gross profit margin to 36.0 percent, which the group attributed to an “enhanced channel mix and a disciplined discount control strategy” in the volatile retail market in China.
Implied Q3 results for YY reflected a 38 percent increase in revenues to $2,262 million from $1,634 million and a profit attributable to shareholders of $95.1 million against a loss of more than $70.6 million. The gross profit improved to $562.2 million from $321.8 million for the period ended Sept. 30, with the corresponding margin rising to 24.85 percent from 19.70 percent in the year-ago period.
Remaining “cautiously optimistic” about the long-term development of its manufacturing business, YY confirmed that rising inflation, interest rate increases and other uncertainties have created an “unstable global macroeconomic environment” that could result in “slower global demand and less visibility.” Those factors, combined with rising footwear inventory levels, “may hamper the stability of the group’s manufacturing segment in the coming months.”
The group, meanwhile, is moving forward with its mid-term strategy to diversify its manufacturing capacity in Southeast Asia, especially in Indonesia, where the labor supply and infrastructure will support sustainable growth.
