Stella International (1836) H1 2025 earnings summary

Executive summary

• Shipment volume rose 3.8% to 27.5 million pairs, led by Sports category growth, despite a high base from early shipments in 2024.

• Revenue increased 0.7% year-over-year to US$775.1 million; net profit was US$78.1 million, down 14.6% from US$91.5 million, with adjusted net profit at US$77.9 million, down 16.1%.

• Operating margin was 10.9%, with net profit margin at 10.1%; gross margin declined to 22.6% from 25.8% year-over-year.

• Interim dividend of HK52 cents per share declared, maintaining a payout ratio above 70%, with additional US$60 million annual cash return program for 2025 and 2026.

• Net cash position remained strong at US$291.3 million as of June 2025, with a net gearing ratio of -26.6%.

Financial highlights

• Gross profit fell 11.9% to US$175.2 million; gross margin declined to 22.6% from 25.8% year-over-year.

• Operating profit dropped 14.5% to US$84.7 million; operating margin at 10.9%.

• Net cash inflow from operations was US$3.9 million, impacted by working capital changes.

• Capital expenditure was US$32.6 million in H1 2025, up from US$23.8 million in H1 2024, focused on Indonesian and Bangladesh factory expansions.

• Cash and cash equivalents at period end were US$350.8 million, up 4.8% from June 2024.

Outlook and guidance

• Moderate increase in shipment volumes expected for full year 2025, but profitability remains constrained by ongoing efficiency improvements in Indonesia and the Philippines.

• Confident in meeting Three-Year Plan targets: 10% operating margin and low-teens profit after tax CAGR by end-2025.

• Additional 20 million pairs of production capacity to be added from 2025 onwards, with new facilities in Indonesia and Bangladesh.

• Handbag and accessories business positioned as a core growth driver, supported by recent Vietnam factory acquisition.

• No change to full-year guidance; tariff impacts and operational turnaround plans in place.