Weiqiao Textile Company Limited (Stock Code: 2698.HK) Announces its 2012 Annual Results

   Weiqiao Textile Company Limited (Stock Code: 2698.HK) Announces its 2012
                                Annual Results

Strengthened cost control, optimized products mix

Continued leadership in industry consolidation

PR Newswire

HONG KONG, March 17, 2013

HONG KONG, March 17, 2013 /PRNewswire/ --

Financial Summary

  oRevenue was approximately RMB15,248 million, about the same level as in
    2011
  oGross profit was approximately RMB1,037 million, an increase of
    approximately 273.0%
  oNet Profit attributable to owners of the parent was approximately RMB482
    million, an increase of approximately 95.9%
  oEarnings per share were RMB0.40, an increase of approximately 90.5%
  oProposed final dividend of RMB0.1246 per share (including tax), an
    increase of approximately 109.8%

Weiqiao Textile Company Limited ("the Company" or "Weiqiao Textile") and its
subsidiaries, collectively the "Group") (HKEX: 2698), the largest cotton
textile producer in China, announced its annual results for the year ended
December 31, 2012 (the "Review Period" or the "Period").

Since the beginning of 2012, the Chinese textile industry has faced a very
complex and volatile environment both domestically and overseas. A variety of
adverse factors such as weak demand in overseas markets, slowing growth in
domestic markets, widening gaps between domestic and overseas cotton prices,
and increasing production costs, has resulted in a notable slowdown in China's
textile industry. However, growth rates of the textile industry's major
economic indicators have picked up slightly since September of 2012 due to
stable growth in domestic demand, adjustments made by enterprises in commodity
inventory levels, and lower comparable basis in 2011; while the gap between
domestic and overseas cotton prices continued to widen, and demand from
international markets remained sluggish, leaving the prospect for an industry
recovery on shaky ground.

In 2012, as market conditions in the textile industry were grim, the Group
recorded revenue of approximately RMB15,248 million, about the same level as
in 2011. Net profit attributable to owners of the parent company was
approximately RMB482 million, representing an increase of approximately 95.9%
as compared with 2011. Earnings per share were RMB0.40. The Board recommended
the payment of a final dividend of RMB0.1246 per share (tax inclusive) for the
year ended 31 December 2012.

During the Year, the Group's production volume of cotton yarn, grey fabric and
denim were approximately 450,000 tonnes, 1,045 million meters and 89 million
meters, respectively. The production volume of cotton yarn, grey fabric and
denim decreased by approximately 27.2%, 10.3% and 12.7%, respectively, year
over year. The decrease was mainly because of intensified competition in the
industry during the Year under Review as a result of the weak demand in the
textile products market and large cotton price gap between domestic and
overseas markets. The Group adjusted its production plan accordingly to reduce
production volume in order to reduce its inventory level.

Commenting on the company's performance in 2012, Ms. Zhang Hongxia, Chairman
of Weiqiao Textile, said, "During the Year, the international market for
textile products and apparel remained sluggish due to the adverse effects of
the weak recovery in the global economy and the sovereign debt crisis in
Europe, while competition became more intense. In addition, part of export
orders for textile products and apparel began shifting from China to
neighboring countries with lower production costs, especially for lower-end
products, thereby further intensifying international competition. During the
year of 2012, domestic cotton prices remained stable while overseas cotton
prices declined continuously, making overseas cotton much cheaper than
domestic cotton. As a result, cotton costs of remained high for textile
companies in China, which adversely affected the competitiveness of Chinese
companies in the global markets. We were also affected to some extent."

"Looking into 2013, the recovery of the global economy still holds many
uncertainties. As a result, Weiqiao Textile will continue to improve its
product mix, encourage innovation, strengthen its brand image, and further
enhance its profitability. In the meantime, by leveraging the Group's
competitive advantages, which include global cotton procurement channels,
self-generated electricity and steam supplies, Weiqiao Textile will continue
its efforts to control costs and maintain, or even increase, its market share
in the face of continued market turbulence through proactive sales strategies
and flexible pricing policies. The Group's management believes that its
operating efficiency and strategy will benefit once the market recovers."

Business Review

Despite the challenging market conditions, the Group continued to strengthen
its business development capabilities, internal management and cost controls,
as well as optimizing resource allocation. The Group also continued to further
optimize its product portfolio to cater to market demand. It also took a more
flexible sales strategy to reduce inventory level of finished products,
increased the proportion of medium-and-high-end products, and made other
improvements across its value chain from research and development to
procurement, production and marketing and sales, so as to ensure its stable
operation.

The proportions of revenue generated from the sales of Cotton yarn, grey
fabrics and denim were 45.3%, 49.7% and 5.0% respectively. The breakdowns of
revenue by products are as follows:

            Revenue    Revenue
                                   Change Sales
Products    in 2012    in 2011            proportion for
                                   (%)    2012 (%)
            (RMB 000') (RMB 000' )
Cotton yarn 6,902,721  6,252,705   10.4   45.3
Grey fabric 7,583,270  8,138,605   -6.8   49.7
Denim       761,482    820,658     -7.2   5.0
Others      483        20,066      -97.6  0.0
Total       15,247,956 15,232,034  0.1    100.0

For the year ended 31 December 2012, the proportion of the Group's revenue
contributed by cotton yarn increased compared with the corresponding period of
last year, while the proportion of revenue contributed by grey fabric
decreased. It was mainly because the Group adopted a flexible sales strategy
to reduce cotton yarn inventory according to the changes in market demand,
which led to an increase in revenue generated from cotton yarn. The proportion
of revenue contributed by denim remained at about the same level as compared
with the corresponding period of last year.

For the year ended 31 December 2012, the breakdowns of revenue by regions are
as follows:

                   Revenue         Revenue
                                                  Change     Sales
Regions            In 2012         In 2011                   proportion for
                                                  (%)        2012 (%)
                   (RMB 000')      (RMB 000')
China              10,367,191      10,326,648     0.4        68.0
Hong Kong          2,610,779       1,037,645      151.6      17.1
East Asia ^(1)     817,960         1,789,984      -54.3      5.4
Others^(2)         1,452,026       2,077,757      -30.1      9.5
Note(1):East Asia includes Japan and South Korea
Note(2):Others mainly include Southeast Asia, the US, Europe, Taiwan and
Africa

Selling and Distribution Expenses
The Group's selling and distribution expenses increased by approximately 14.4%
to approximately RMB206 million for the year ended 31 December 2012 from
approximately RMB180 million for the corresponding period of last year. In
particular, transportation costs increased by approximately 15.4% to
approximately RMB150 million from approximately RMB130 million in 2011, which
was mainly due to the increased sales volume of the Group's products during
the Year. Salary of the sales staff was approximately RMB28 million,
representing an increase of approximately 64.7% as compared with approximately
RMB17 million for the corresponding period of last year, which was primarily
due to the increase in the sales amount of the Group's domestic sales during
the Year, which resulted in the increase in sales staff's salary accordingly.
Sales commission was approximately RMB10 million, representing a decrease of
approximately 47.4% as compared with approximately RMB19 million of the
corresponding period of last year, which was primarily due to a decrease in
the Group's overseas sales through intermediate traders during the Year, which
resulted in a decrease in the commission paid accordingly.

Administrative Expenses
Administrative expenses of the Group for the year ended 31 December 2012
amounted to approximately RMB252 million, representing an increase of
approximately 9.1% as compared with approximately RMB231 million of the
corresponding period of last year. It was primarily due to the upward
adjustment of the salary of the administrative management staff.

Finance Costs
For the year ended 31 December 2012, finance costs of the Group were
approximately RMB629 million, representing an increase of approximately 34.4%
as compared with approximately RMB468 million of last year, among which, the
interest expenses amounted to approximately RMB599 million, representing an
increase of approximately 5.3% as compared with approximately RMB569 million
of last year, which was mainly attributable to the increase in the interest
rates of bank borrowings during the Year; and the exchange loss amounted to
approximately RMB30 million for holding a large amount of balances of payables
and loans denominated in US dollar, which was affected by the depreciation of
the Renminbi; while an exchange gain of approximately RMB102 million was
recorded last year.

About Weiqiao Textile
Weiqiao Textile Company Limited, a non state-owned enterprise, is the largest
cotton textile producer in the PRC, specializing in the production, sales and
distribution of cotton yarn, grey fabric and denim. During the past ten years,
the Group developed large-scale production capabilities by capitalizing on
China's rapid economic growth. It has achieved a strong position in the
global textile markets by employing advanced technology in state-of-the-art
facilities. Weiqiao Textile is located in Shandong, China's second largest
cotton producing province. The Group has four production bases in Weiqiao,
Binzhou, Weihai and Zouping and employs approximately 82,000 people. As at
December 31, 2012, the Group produced approximately 450,000 tons of cotton
yarn, 1,045,000,000 meters of grey fabric and 89,000,000 meters of denim.

Disclaimer
This press release distributed herewith includes forward-looking statements.
All statements, other than statements of historical facts, that address
activities, events or developments that Weiqiao Textile expects or anticipates
will or may occur in the future (including but not limited to projections,
targets, estimates and business plans) are forward-looking statements.
Weiqiao Textile's actual results or developments may differ materially from
those indicated by these forward-looking statements as a result of various
factors and uncertainties, including but not limited to price fluctuations,
actual demand, exchange rate fluctuations, market shares, competition,
environmental risks, changes in legal, financial and regulatory frameworks,
international economic and financial market conditions, political risks,
project delay, project approval, cost estimates and other risks and factors
beyond our control. In addition, Weiqiao Textile makes the forward-looking
statements referred to herein as of today and undertakes no obligation to
update these statements.

Investor/Media Enquiries:

Mr. Chen Yuanyuan                Ms. Wei Wei

Christensen                      Christensen

Email:ychen@ChristensenIR.com   Email:weiwei@ChristensenIR.com 

Tel: (852) 2232 3918/ 6954 7509 Tel: (852) 2232 3966/ 5345 9399

Fax: (852) 2117 0869             Fax: (852) 2117 0869

SOURCE Weiqiao Textile
 
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