HONG KONG — Luen Thai Holdings Ltd., a major Asian apparel manufacturer, reported a 28.8 percent rise in net profits for 2004 on a 1.6 percent increase in revenue.
But management warned that, despite the Jan. 1 lifting of apparel and textile quotas, it’s presuming that China — the core of its operations — will face some form of additional export restrictions this year.
“It is anticipated that the global quota and trade-related regulations will continue to pose some short-term uncertainties,” chief executive officer Henry Tan said in a statement.
The company noted it assumes that antisurge measures known as safeguards will be imposed on China.
To deal with this risk, it plans to diversify its product base, step up its sales outside the U.S. and continue to use Hong Kong and Macau outward processing arrangements.
Through these arrangements, goods that are partly assembled in mainland China and finished in those special administrative regions can be counted under the regions’ quota allocations, rather than the mainland’s.
Luen Thai has more than 18,000 employees across Hong Kong, China, the U.K., the Philippines, Cambodia, the U.S. and Saipan, a U.S. territory. Its customers include Polo Ralph Lauren, Liz Claiborne, Limited and Express.
The report was the firm’s first full-year results since being listed on the Hong Kong Stock Exchange’s Mainboard in July.
Net profit was $30.4 million, up from $23.6 million. Revenues reached $553.8 million, up from $544.9 million. Luen Thai reported its performance in dollars.
The firm discontinued several operations during the year, including its former Mexican manufacturing facilities.
Despite the uncertainties ahead for China, which already faces safeguard complaints in the U.S., Luen Thai plans to continue expanding its Dongguan “Supply Chain City” megafactory. Eight buildings at the complex are operational, four are under construction and another two are planned.
So far, the investment for the complex has totaled $51 million, with another $16.6 million planned for another building currently under construction.