Elegance International's sales dipped by 14.6 percent to HK$327.7 million (€34.0m-$42.0m), and net profit fell by 66.0 percent to HK$19.0 million (€2.0m-$2.4m) for the year ended March 31. The group cited SARS, the invasion of Iraq, the depreciation of the US dollar, increases in costs of raw materials and rising operational costs in China.
The appreciating euro helped the Chinese company's European sales to rise by 11.1 percent to HK$150.7 million (€15.6 m-$19.3m) , making Europe the group's largest market. Turnover fell in the USA - down 32.3 percent to HK$121.8 million (€12.6 m-$15.6m) - China - down 24.3 percent to HK$35.4 million (€3.7 m-$4.5m) - and in other Asian countries - down 39.9 percent to HK$8.8 million (€0.9m-$1.2m)). The management declines to discuss the role of Safilo, one of the company's major shareholders, in the latest sales surges outside Asia.
Elegance's second factory in Shenzhen, China, went on stream in April, pushing the total workforce up by more than 10 percent to 4,725. The increased headcount and higher wages contributed to higher operational costs. The new factory will raise Elegance's capacity by 30 percent to an annual total of some 2 million units. Production costs should decrease as more of the new space is occupied.
Orders placed by European and US customers since Jan. 1 are higher than they were a year ago by ?low double digits.? Counting on a continued economic recovery in both markets to help it moving forward, Elegance is striving to broaden its customer base in both territories.