Affected by the COVID-19 pandemic, the manufacturing industry is generally in a downturn. Taiwan-funded shoe manufacturer Jiuxing Holdings Co., Ltd. (1836.HK) has turned from profit to loss in the first half of the year, recording a slight loss of US$5.247 million, and a net profit of 38.937 million in the first half of 2019 Dollar.

Group Chairman Chen Limin commented on the performance that the new crown epidemic has hit the global retail industry severely. Almost all countries and regions have adopted blockade measures to temporarily close stores. As a result, the demand for footwear has plummeted, which has a significant impact on the company's brand customer business.

In addition to the decline in customer demand, the company's production efficiency has also been reduced due to the pandemic.

In response to the negative impact of the epidemic on the company, Chen Limin said that Jiuxing Holdings has adopted prudent measures including strict reduction and control of costs, review and improvement of credit risk and cash management.
During the reporting period, Jiuxing Holdings' revenue fell by 31.9% to US$511.5 million, compared with US$750.6 million in the same period in 2019. The decline in revenue was mainly due to the sudden drop in shipment volume and average selling price caused by the outbreak of the epidemic that caused customers to postpone or cancel orders. In addition, changes in seasonal order patterns also affect shipments and average selling prices.
In the first half of the year, the shipment volume of Jiuxing Holdings declined by 30.8% year-on-year to 20.4 million pairs, compared with 29.5 million pairs in the same period in 2019. The average unit price of each pair of shoes fell 2.0% year-on-year, from 25.2 US dollars to 24.7 US dollars. The decrease in unit price was mainly affected by changes in product mix.

Due to the popularity of leisure sports in the past few years, in the first half of fiscal year 2020, the fashion sports product channel fashion footwear became the company's largest category, accounting for 49.3%, while the proportion of fashion footwear fell to 29.2%. Casual footwear and retail business were respectively Accounted for 20.1% and 1.4%.

During the reporting period, the Group's revenue in North America and Europe accounted for 50.9% and 24.4%, and China and the Asian markets outside China accounted for 15.3% and 7.2%, respectively.

In the first half of the year, the gross profit of Jiuxing Holdings fell 37.3% to 84.749 million US dollars, and the gross profit rate fell to 16.6%.
Operating loss for the period was US$3.475 million, and operating profit for the same period in 2019 was US$45.143 million. The operating loss was mainly due to one-time costs such as layoffs and work stoppages, including severance payments of US$13.50 million and US$2,700,000 for shutdown costs, but received government subsidies of 1.90 million. After adjustments, operating profit of US$10.9 million was recorded in the first half of the year.




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