Yue Yuen Industrial (551) H2 2024 earnings summary

Executive summary

• FY24 revenue rose 3.7% year-over-year to US$8,182.2mn, with profit attributable to owners up 42.8% to US$392.4mn, driven by strong manufacturing recovery and improved utilization.

• Manufacturing segment drove growth, with revenue up 11.1% and profit attributable to owners up 51.1% year-over-year; shipment volume rose 16.9% to 255.3mn pairs.

• Retail segment (Pou Sheng) revenue declined 8.0% in RMB terms (9.5% in USD), but profit attributable to owners was stable (+0.2% YoY); gross margin improved to 34.2%.

• Dividend per share increased to HK$1.30, with a payout ratio of nearly 70%; final dividend proposed at HK$0.90 per share.

• Strong cash position maintained, with net cash at US$185.9mn and total group cash at US$943.2mn.

Financial highlights

• Group gross profit margin steady at 24.4%; operating profit margin improved to 6.7% (+1.6pp YoY).

• Free cash flow was US$326mn, down 56.5% YoY, mainly due to higher capex and tax payments.

• Finance costs decreased 25.5% YoY; borrowings reduced by 22.1% to US$757.3mn; gearing ratio improved to 15.4%.

• Basic EPS rose 42.9% to 24.37 US cents; ROE improved to 8.8% and ROA to 4.4% in FY24.

• Capital expenditure reached US$211.3mn, mainly for manufacturing expansion and digital transformation.

Outlook and guidance

• Continued investment in digital transformation, automation, and AI-driven operational excellence.

• Disciplined capacity expansion in Central Java, Indonesia, and India to align with brand partners' strategies.

• Retail business to focus on profitability, omni-channel integration, and store refinement.

• Expects global sporting goods industry CAGR of 6% through 2029, with optimism for sustainable growth.

• Near-term risks include global tariffs, inflation, consumer confidence, and regional conflicts affecting shipping.