Li Ning first-half net income 49% down
Chinese sportswear brand Li Ning has posted a 49% decline in first-half net income as higher costs and increased competition cut margins.
Profit for the six months ended June 30 decreased to $46 million from $91 million a year earlier, according to a statement filed to the Hong Kong stock exchange. Sales fell 4.8% to $672.8 million.
The gross margin for the second half of this year will be lower than in the same period in 2010 and the margin on profit attributable to equity holders for the full year of 2011 is expected to decline by about 1 to 2 percentage points, the company said.
“Rising costs have inflicted far-reaching impacts on the overall structure of the industry and have had a profound influence on different segments of the industry value chain,” a statement from Li Ning said.
Increasing costs for raw materials, labour and rents, as well as higher discounts for distributors, cut Li Ning’s gross profit margin to 47.3% in the first half from 47.9% a year earlier, the company said. The margin on profit attributable to equity holders decreased to 6.8% from 12.9%. Operating profit decreased 46% to $69.1 million from a year earlier.
The company said in July it expected first-half sales to drop about 5% and the margin on profit attributable to equity holders to shrink to as low as 6% on higher costs and increased competition.
