(Yicai) Aug. 23 — Huali Industrial Group reported a 29 percent year-on-year rise in net profit in the first six months, as a resurgence in enthusiasm for sports in China after the pandemic boosted shoe sales for Nike and other foreign sportswear giants that Huali supplies.
Huali posted net profit of CNY1.9 billion (US$266.2 million) in the six months ended June 30, the Zhongshan-based company said yesterday. Revenue rose 25 percent to CNY11.5 billion (US$1.6 billion), a big improvement from a year earlier, when net profit fell 1 percent year-on-year and revenue fell 2 percent.
Orders began to pick up in the fourth quarter of last year and sportswear companies’ inventories returned to normal levels in the second half of 2023, Huali, whose customers include Nike, Converse, Puma and Under Armour, said in its financial report.
In the first half of the year, Huali delivered 19 percent more sneakers than in the previous year, namely 108 million pairs, the company said.
As consumption increases and major sporting events and outdoor activities become an important part of Chinese people’s daily and social lives, demand for sneakers is growing steadily, Huali said. Consumers are also turning to specialty products, so there are more orders for subcategories of sports shoes, he added.
This trend is reflected in the earnings of multinational athletic shoe and apparel companies in China. Nike’s sales in China rose 7 percent to $1.9 billion in the fourth fiscal quarter ended May 31, excluding currency fluctuations. The Oregon-based company is now posting its seventh consecutive quarter of growth in China. And Adidas’ sales in China rose 9 percent year-on-year to 822 million euros ($914.6 million) in the second quarter, marking its fifth consecutive quarter of growth.
Due to labor costs and the international trade environment, Huali is moving some of its production capacity overseas. According to the financial report, its factories in Vietnam and Indonesia started production in the second quarter.
However, the production of the new factories will only reach a relatively high level after several years of operation. The reason for this is the necessary training of the local workers and the close cooperation between the various departments.
Huali (SHE:300979) shares fell 1.1 percent to end the day at CNY 63.83 (USD 9). The stock has gained 24 percent so far this year.
Editors: Dou Shicong, Kim Taylor
