YUE YUEN IND(00551) issues profit warning, anticipating a year-on-year decrease of approximately 55% to 60% in attributable net profit for the first half of the year.

Yue Yuen Ind (00551) announced that the group expects a decrease of approximately 55% to 60% in the net profit attributable to owners of the company for the six months ending June 30, 2026, compared to the same period in 2025, amounting to approximately 171.2 million US dollars. According to the group's existing data, the decrease in profit is mainly due to multiple challenges faced by the group's manufacturing business, including weak demand leading to a decrease in sales volume, rising costs, and pressure on productivity, negatively impacting the gross profit margin of the group's manufacturing business. Further analysis is as follows: 1. Insufficient demand and external factors: Influenced by macroeconomic uncertainties, tariff policies, and inflation risks, end-demand for inventory is conservative, leading brand customers to be more cautious in placing orders, causing fluctuations in demand for orders during this period, resulting in a 4.7% decrease in the group's manufacturing business revenue compared to the same period last year. The insufficient scale leads to operating deleverage, and tariff concessions also have a negative impact; 2. Upward pressure on labor and manufacturing costs: In line with the group's long-term capacity layout, the new factory is ramping up according to plan, and the number of employees in the manufacturing business has increased year-on-year. In addition to wage increases in various regions, overtime and other cost-saving measures have not reached set targets, collectively pushing up overall labor and manufacturing costs; 3. Imbalance in production schedules: In the first quarter of 2026, the three major production sites of the group had overlapping long holidays, posing many challenges for production schedules. In the second quarter, monthly orders at each factory became increasingly volatile, making scheduling difficult, and geopolitical and supply chain uncertainties further disrupting operations. Despite the group's proactive coordination of order rhythms to mitigate the associated impact, each manufacturing plant continues to face the problem of uneven capacity utilization during this period, leading to a decrease in productivity and further increasing the unit cost of footwear manufacturing. The group will continue to closely monitor changes in the global political and economic environment and will continue to adhere to the core guiding principle of rapid response, balancing demand, order scheduling, and labor supply to strengthen operational efficiency.