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China's Yue Yuen H1 profit falls 48 pct on staff benefits
August 14, 2014 / 1:03 AM / 3 years ago

China's Yue Yuen H1 profit falls 48 pct on staff benefits

HONG KONG, Aug 14 (Reuters) - Chinese shoe manufacturer Yue Yuen Industrial Holdings Ltd posted a 48 percent fall in first-half net profit as it booked provisions to improve employee benefits - steps it has taken after it suffered from a major strike earlier this year.

The strike was one of China’s biggest this year, with thousands of Yue Yuen workers only agreeing to go back to work after the footwear maker for companies such as Nike Inc and Adidas pledged to meet some of their demands for better benefits.

“The recent events that have affected the manufacturing operations in the first six months of 2014 underscore the near term challenges in the business and for the industry in general,” Chairman Lu Chin Chu said in a filing to the Hong Kong bourse.

Net profit slid to $101.4 million, down from $194.45 million in the same period a year earlier. Revenue rose 6.8 percent to $3.95 billion.

Labor activism has surged in China in recent months as slowing economic growth and rising costs have squeezed companies in industrialised areas like the Pearl River Delta in southern Guangdong province, home to Yue Yuen’s factories.

Yue Yuen, which is controlled by Taiwan-listed Pou Chen Corp , said it would reallocate production capacity across Asia to offer customers different input cost structures.

The company had about 417,000 staff as of end June 2014. (Reporting by Donny Kwok; Editing by Edwina Gibbs)

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