Hong Kong-listed yarn and garment fabric manufacturer the Texhong Textile Group saw a fall in profits for the first half of the year due to weak yarn sales prices in mainland China market and the depreciation of the yuan against the US dollar. It has a subsidiary unit in India. The profit attributable to shareholders declined by 72 per cent year-on-year for the six months ended June 30 this year.
The company’s gross profit margin dropped by 8.2 percentage points to 13.2 per cent while its net profit margin is also down 9.7 percentage points to 2.7 per cent. Its strategy would be to gradually increase the proportion of synthetic fiber yarn sales and reduce the impact of fluctuation in cotton price on the group’s financial performance.
The depreciation of the yuan against the dollar would continue to affect its business, as a significant amount of the company’s sales revenue is denominated in yuan, while certain costs and liabilities are denominated in dollars. The company’s revenue from external customers rose by 26.5 per cent thanks to higher yarn sales volume in the first half of this year. Mainland China was the major source of the company’s revenue followed by Macau.