Yue Yuen Industrial (Holdings) Ltd. : Yue Yuen Announces 2013 First Quarter Results

PRESS RELEASE

Yue Yuen Announces 2013 First Quarter Results

? Turnover up 0.5% to US$ 1.71 billion compared to the same period last year

? Gross profit was down 10.6% to US$ 350.9 million

? Recurring operating profit attributable to Owners of the Company was down 33.4% to US$ 60.6 million

? Non-recurring operating profit attributable to Owners of the Company for the period amounted to

US$ 1.0 million

? Total net profit attributable to Owners of the company amounted to US$ 61.6 million, down 49.9%

compared to US$ 123.0 million in the same period last year

(Hong Kong, 14 May 2013) - Yue Yuen Industrial (Holdings) Limited ("the Group", stock code: 551) today announced its unaudited consolidated results for the first quarter of Fiscal Year 2013 from 1st January 2013 to
31st March 2013. The fiscal period is now from 1st January to 31st December.
Total turnover of the Group rose 0.5% for the period to approximately US$ 1,709.5 million. Recurring operating profit was down 33.4% to US$ 60.6 million. The Group also had non-recurring profit for the quarter of roughly US$ 1.0 million: for the same period last year, this amount was US$ 32.0 million, which includes a US$ 18.8 million one-time gain arising within the Jointly Controlled Entity category. Please refer to the announcement for further details. The net profit attributable to Owners of the Company for the first quarter of the Fiscal Year 2013 amounted to approximately US$ 61.6 million.

Business Review

Revenue

Total Turnover by Product Category For the three months ended 31st March 2013 2012

(all figures rounded to millions)
	US$ millions	%	US$ millions	%	%change
Athletic Shoes	865.5	50.6	876.3	51.5	(1.2)
Casual/Outdoor Shoes	281.5	16.5	266.7	15.7	5.5
Sports Sandals	29.2	1.7	40.7	2.4	(28.3)
Retail Sales - Shoes, Apparel &	414.2	24.2	385.2	22.6	7.5
Leasing
Soles, Components & Others	119.1	7.0	132.5	7.8	(10.1)
Total Turnover	1,709.5	100.0	1,701.4	100.0	0.5

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Total Turnover by Geographical Market For the three months ended 31st March, 2013 2012

( all figures rounded to millions )
	US$ millions	%	US$ millions	%	%change
U.S.A.	529.7	31.0	474.1	27.9	11.7
Europe	291.5	17.1	307.7	18.1	(5.3)
Asia*	762.0	44.6	778.2	45.7	(2.1)
South America	73.9	4.3	82.3	4.9	(10.2)
Canada	19.4	1.1	21.0	1.2	(7.6)
Other Areas	33.0	1.9	38.1	2.2	(13.4)
Total Turnover	1,709.5	100.0	1,701.4	100.0	0.5

*Excluding retail sales, Asia turnover was US$347.8 million and US$393.0 million, representing 20.3% and 23.1% of the total turnover in

2013 and in 2012 respectively.

Sales of athletic shoes and casual/outdoor shoes were down by 1.2% and up by 5.5% respectively. Total shoe manufacturing volume decreased by 1.5% to 76.3 million pairs. The Group's shoe manufacturing turnover experienced growth for in the U.S.A, but fell for all other regions.
With regards to the retail and wholesale business of sportswear in the Greater China Region, Sales increased by
7.5% to US$ 414.2 million in the three months period compared to US$ 385.2 million reported in the last period, due to factors such as strategies to improve sales yield per shop and promotional sales to reduce inventory to more optimal levels.

Gross Profit

During the period, the Group's gross profit declined by 10.6% to US$ 350.9 million. When looking at the underlying business units, gross profit for the manufacturing operations for international brands was adversely affected by rising input costs as well as the lower operating efficiency due to the relocation and allocation of production capacity. Pou Sheng had a gross profit decline of 9.2% to US$ 117.9 million on account of discounting campaigns to reduce inventory.

Selling & distribution expenses, Administrative expenses and Other income

For the Group, the sum of Selling & distribution expenses, Administrative expenses is almost the same as the amount incurred in the same period last year. For the manufacturing operations, the sum of these items increased very slightly compared to the same period last year whereas for Pou Sheng the sum of these items fell by 3.1%. Other income for the Group decreased this year mainly due to the profit recorded last year on disposal of property, plant and equipment.

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Share of results from Associates and Jointly Controlled Entities (" Share of A&JCE ")

At the Group level, Share of A&JCE fell by 76.8% to US$ 7.3 million. For the manufacturing operations, Share of A&JCE also experienced a significant decline due to the recognition of a one-time gain of US$ 18.8 million in the same period last year. For Pou Sheng, Share of loss from A&JCE reduced by 30.2% so that it only experienced a loss of US$3.7 million.
Yue Yuen Industrial (Holdings) Limited
www.yueyuen.com
Jerry Shum
Investor Relations Director
Tel: [phone]
Fax: [phone]
E-mail: [e-mail]

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Consolidated Income Statement

For the three months ended 31st March, 2013

2013

(unaudited)

3 months

2012

(unaudited)

3 months

US$'000 US$'000

Turnover 1,709,478 1,701,394

Cost of sales (1,358,604) (1,308,749)

Gross profit 350,874 392,645

( % of turnover ) 20.53% 23.08%

Other income 33,012 47,637

Selling and distribution expenses (148,152) (150,546)

Administrative expenses (132,158) (131,962) Other expenses (47,872) (45,426) Finance costs (7,586) (8,956)

Fair value changes on derivative financial instruments	2,437	(10,888)
Gain on disposal of subsidiaries Fair value changes on consideration	-	5,761
payable for acquisition of business	170	-
Impairment loss on investments in associates and jointly
controlled entities Impairment loss on loans to jointly controlled entities	- (2,414)	(6,290) -
Share of results of associates	6,494	4,920
Share of results of jointly controlled entities	801	26,577

Profit before taxation 55,606 123,472

Income tax credit (expense) 73 (4,789)

Profit for the period 55,679 118,683

( % of turnover ) 3.26% 6.98%

Attributable to:

Owners of the Company 61,608 123,026

( % of turnover ) 3.60% 7.23%

Non-controlling interests (5,929) (4,343)

55,679 118,683

By Category:

Recurring operating Profit 60,614 91,005

( % of turnover ) 3.55% 5.35%

Non-recurring operating profit/(loss) 994 32,021

Net Profit attributable to Owners of the Company 61,608123,026

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