Yue Yuen Industrial (551) H1 2024 earnings summary

Executive summary

• Revenue for 1H24 declined 3.4% YoY to US$4,015.4mn, while profit attributable to owners surged 120.6% to US$184.4mn, driven by improved manufacturing utilization and cost controls.

• Manufacturing segment saw shoe volume up 9.9% YoY to 120.7mn pairs, with utilization rate rising and ASP down 7.8% due to product mix.

• Retail (Pou Sheng) revenue fell 12.7% YoY to US$1,381.0mn amid weak store traffic in China, but gross margin improved to 34.2% and net profit rose 10.2% YoY.

• Interim dividend doubled to HK$0.40 per share, with a payout ratio of 45%.

• Recurring profit attributable to owners rose 123.8% to US$178.9mn; basic EPS increased 120.4% to 11.44 US cents.

Financial highlights

• Group gross profit margin rose 0.8pp YoY to 24.3%; operating profit margin increased to 6.5%.

• Manufacturing revenue grew 2.4% YoY to US$2,634.4mn; operating profit up 124.3% YoY.

• Group EBITDA increased 23.6% YoY to US$440.9mn; net cash position at US$65.8mn as of June 30, 2024.

• Free cash inflow was US$79.9mn, down from US$279.1mn YoY.

• Gearing ratio decreased to 18.1%; current ratio improved to 2.2.

Outlook and guidance

• Management expects continued recovery in global footwear demand, with a 3.4% CAGR projected for 2024–2028 and ongoing focus on cost efficiency and digital transformation.

• Plans to expand manufacturing capacity in Indonesia and India, and invest in digital platforms and automation.

• Retail business will focus on omni-channel strategy, store refinement, and digital upgrades.