According to the profit warning issued to shareholders and potential investors on the Hong Kong Stock Exchange, the company expects a profit decline of between 50 per cent and 55 per cent in the first nine months of 2026. According to the statement, this corresponds to a figure of around 278.7 million US dollars. Yue Yuen attributes the decline in profit to a fall in turnover due to weakening demand, combined with rising costs and increasing pressure on production efficiency, which is weighing on the gross profit margin of the group’s manufacturing business.
Furthermore, Yue Yuen cites three reasons:
- Against a backdrop of macroeconomic uncertainties, tariff policies and inflationary risks, inventory sentiment in the end markets remained conservative. At the same time, demand for orders with short lead times increased, as brand customers also adopted a more cautious approach when placing orders. This led to increased volatility in order demand during the reporting period and, consequently, to a 3.8 per cent year-on-year decline in revenue in the Group’s manufacturing business.
- The average number of employees in the manufacturing business rose during the reporting period compared with the same period last year. Together with rising wages in various regions and slower-than-expected progress in reducing overtime and other inefficiency-related costs, these factors collectively contributed to an increase in total labour and overhead costs.
- In the first half of 2026, the scheduling of public holidays at the three main production sites, as well as increased order volatility across various plants, posed numerous challenges for production planning and resource allocation. Production balancing between the production sites remained uneven during the reporting period, which affected overall production efficiency and drove up unit costs in footwear manufacturing.
The information and key figures are provisional and have not been independently audited. The third-quarter annual report is expected to be published on 12 November 2026.
