Largest cotton textile producer in China

Weiqiao Textile Announces 2014 Annual Results

GMT 05:11 2015 Tuesday ,24 March

Sriyadithatextile - Weiqiao Textile Announces 2014 Annual Results

Ms. Zhang Hongxia, Chairman of Weiqiao Textile
Courtesy Google

About Weiqiao Textile :

Weiqiao Textile Company Limited, a non-state-owned enterprise, is the largest cotton textile producer in the PRC, specializing in the production, sales and distribution of cotton yarn, grey fabric and denim. During the past ten years, the Group developed large-scale production capabilities by capitalizing on China's rapid economic growth.  It has achieved a strong position in the global textile markets by employing advanced technology in state-of-the-art facilities. Weiqiao Textile is located in Shandong, China's second largest cotton producing province. The Group has four production bases in Weiqiao, Binzhou, Weihai and Zouping and employs approximately 74,000 people. As at December 31, 2014, the Group produced approximately 394,000 tons of cotton yarn, 978,000,000 meters of grey fabric and 76,000,000 meters of denim.

 

Financial Summary

    Revenue was approximately RMB11,211 million, a decrease of approximately 19.2%
    Gross profit was approximately RMB743 million, a decrease of approximately 38.4%
    Net Profit attributable to owners of the parent was approximately RMB308 million, a decrease of approximately 51.0%
    Earnings per share were RMB0.26, a decrease of approximately 50.9%
    Proposed final dividend of RMB0.0773 per share(including tax)

Weiqiao Textile Company Limited ("the Company" or "Weiqiao Textile") and its subsidiaries, collectively the "Group") (HKEX: 2698), the largest cotton textile producer in China, announced its annual results for the year ended December 31, 2014 (the "Review Period" or the "Period").

In 2014, the global economy continued to recover at a moderate pace, with clear divergence in economic performance, while concurrently, China's economy entered into a "new normal"development phase. Development of the textile industry was generally stable during the year, with a decline in growth rate as compared to 2013, showing a trend of overall steady but slow development.

Export of China's textile products and the apparel industry in 2014 was affected by the slow recovery in overseas market demand, resulting in a slowdown in growth rate. According to the General Administration of Customs of the PRC, China's total export of textile products and apparel was approximately US$298.5 billion in 2014, representing an increase of approximately 5.1% year-on-year which was approximately 6.3 percentage points lower than the same period last year. Export of apparel increased by approximately 5.2% year-on-year to approximately US$186.3 billion, and export of textile products increased by approximately 4.9% year-on-year to approximately US$112.2 billion.

During the Year, affected by factors such as the adjustment to the cotton policy, the drastic decrease in cotton price and the wait-and-see approach adopted by downstream customers, the sales volume of the Group's textile products decreased as compared with the same period last year with a decline in selling prices, resulting in a year-on-year decrease in the revenue and net profit of the Group. The Group recorded revenue of approximately RMB11,211 million, representing a decrease of approximately 19.2% as compared with the corresponding period of 2013. Net profit attributable to owners of the parent was approximately RMB308 million, representing a decrease of approximately 51.0% as compared with the corresponding period of 2013. Earnings per share were RMB0.26. The Board recommended the payment of a final dividend of RMB0.0773 per share (including tax) for the year ended 31 December 2014.

During the Year, the slow recovery of the global economy, the declining cotton price due to the adjustment of cotton policy in China and the wait-and-see approach adopted by the downstream market resulted in reduced demand in both domestic and overseas markets. In response to the changing market conditions, the Group adjusted its production plan in a timely manner, leading to a decrease in the production volume of cotton yarn and grey fabric as compared with the corresponding period of last year. The Group's production volume of cotton yarn and grey fabric were approximately 394,000 tonnes and 978,000,000 meters, representing a decrease of approximately 19.3% and 4.2% as compared with the corresponding period of last year respectively. The production volume of denim was approximately 76,000,000 meters, representing an increase of approximately 4.1% as compared with the corresponding period of last year, mainly due to the increased production volume of middle to high-end denim based on market demands.

Commenting on the company's performance in 2014, Ms. Zhang Hongxia, Chairman of Weiqiao Textile, said, "During the Year under Review, the greatest change faced by the Chinese textile industry was the changes in cotton policy implemented by the PRC government. With the termination of the cotton temporary reserve policy which had been in force for three years and the implementation of the direct subsidy policy in Xinjiang, which is the main cotton production base in China, by the PRC government in September 2014, the domestic cotton price began to drop significantly. Due to the wait-and-see approach adopted by downstream enterprises, Chinese textile enterprises faced downward pressure in the selling prices of their products. The operating results of textile enterprises were affected to some degree in the short term. However, the implementation of the direct subsidy policy will gradually bring the domestic cotton price in line with the market, narrowing the gap between the domestic and overseas cotton prices, which will improve the competitiveness of Chinese textile enterprises internationally in the medium and long run."

 

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