Elegance International is starting a new factory in Shenzhen, China during the 1st half of this year. It will add new machinery and consolidate the production of two of its 3 existing plants, but with no diversification of the product line and no expansion of capacity at this stage.
The group says the uncertain economic recovery in the USA, stagnant growth and high unemployment in the euro zone economy and the attack on Iraq weakened consumer confidence in major markets, causing customers to slow down their order placements. SARS also delayed order placements.
The Chinese company, in which Safilo is a minority shareholder, saw its turnover drop by 22 percent to HK$164.1 million (€16.5m?US$21.1m) for the 6 months ended Sept. 30. Net profit fell by 60 percent to HK$18.2 million (€1.8m?US$2.3m). Sales declined by 33 percent in the USA and by 41 percent in China. Turnover in Europe fell by only 4 percent to HK$69.9 million, with a decline in operating profit on these sales of 54 percent to HK$8.3 million. The group's gross margin fell to 33.7 percent from 42.0 percent, in the year-ago period, but sales and margins as well as orders from European and US customers have since improved.