Pou Chen, Feng Tay to enjoy substantial growth in orders from Nike

Taipei, Sept. 29, 2004 (CENS)--Pou Chen Corporation and Feng Tay enterprises Co., Ltd., two major Taiwan-based contract manufacturers of the world's largest sport-shoe brand Nike, are expected to see a continued growth in orders from Nike in the remaining months of the year, according to industry sources.

With sales performance better than expected and share price hitting record high, Nike has recently placed more orders with its contract manufacturers, including Pou Chen and Feng Tay.

Feng Tay spokesperson Chen Li-chin said her company would see sales of sports shoes to Nike grow by 10% annually to reach over 36 million pairs this year. Pou Chen said it would grow in line with Nike as the latter is its long-term business partner.

Pou Chen noted its affiliate Yue Yuan Industrial (Holdings) Ltd., which is listed on the Hong Kong Stock Exchange, secured 15.5% and 6.6% annual growth in sales and after-tax earnings in the third quarter of this year.

At present Pou Chen holds a 50.78% stake in Yue Yuan, which raked in US$93.2 million in after-tax earnings in the third quarter of fiscal 2004 up to the end of June. Pou Chen said Yue Yuan has contributed NT$2.01 (US$0.06 at US$1:NT$33.9) to its earnings per share in the first three quarters of the fiscal 2004.

Yue Yuan posted US$2.026 billion and US$251 million in cumulative sales and after-tax earnings, respectively, in the first three quarters of the fiscal 2004. The company sold 125 million pairs of sport shoes in the first three quarters, up 3.8% from the corresponding period of the previous fiscal year. Average price of the shoes sold in the first three quarters reached US$13 each pair.

Yue Yuan said its sales growth in the first three quarters of fiscal 2004 was mainly contributed by its core shoe-making business.

In addition to the substantial growth in sales of shoes, Yue Yuan also saw outstanding performance in retailing operations in mainland China. The company boasted it saw retail sales grow by 213% annually to reach US$49.5 million in the first three quarters of this year from US$15.8 million registered in the same period of last year.

Yue Yuan said it would also see substantial growth in sales of garment, backpack bags, and retails for the rest of this year. Seeing Yue Yuan's strong performance in the first three quarters of fiscal 2004, a domestic institutional investor has recently elevated Yue Yuan's investment ratings.

At present Pou Chen and Feng Tay are capable of supplying sports shoes to meet 35% of Nike's total demand. Feng Tay said it would supply over 36 million pairs of sports shoes to Nike this year, up 10% from the previous year. Next year's sales to Nike would also grow by 10%.