During the review period, the Group’s revenue increased by approximately 4.7% to RMB 3,896 million, gross profit was approximately RMB 944 million. After deducting listing and other expenses, the group’s profit for the year was approximately RMB 541 million, representing a decrease of approximately 4.9% as compared to the same period in 2019, mainly due to a loss of approximately RMB 85.3 million in exchange losses compared to approximately RMB 2.8 million in exchange gains 2019. Earnings per share was RMB 0.24. The board of directors recommends the payment of a final dividend of HK7.9 cents (equivalent to approximately RMB7 cents) per share for the review period.
Mr. Zengming, chairman and executive director said: “In 2020, the world went through a year like no other. The coronavirus (“COVID-19″), a once-in-a-century pandemic, ravaged the world, making considerable impacts on the global economy. It also put a daunting challenge on the furniture industry at the beginning of the outbreak. Last year, the Group successfully listed on the main board of the Stock Exchange in a challenging year. Although the outbreak COVID-19 posed unexpected and serious threats to the global economy, the pandemic did not have a significant adverse impact on the Group’s sustainable operation, the Group’s revenue continued to record positive growth during the period under review.”
However, as the global economy was being hit hard by the pandemic, some of the small and medium-sized furniture traders reduced their orders. The Group carefully assessed the situation and focused strategically on maintaining its major customers. In FY2020, the sales to the top five customers of the Group achieved growth in different degrees, with the growth rates ranging from 3% to 9%. The Group’s revenue for the period was approximately RMB 3,343 million.
The Group’s panel-type furniture products include television cabinets, bookshelves, shelves, desks and coffee tables. Panel-type furniture has always been the core revenue driver of the Group. During review period, the revenue was approximately RMB 3,606 million, an increase of 3.5% over the same period in 2019. Gross profit margin of panel-type furniture recorded slight increment due to the higher gross profit margins from some of our newly launched panel-type furniture products, as well as the increase in prices of some products, which partially offset the impact of the depreciation of the U.S. dollar against the RMB.
Leveraging on our expertise and experience on product design and development as well as our business relationships with major overseas retail chains and furniture traders, we further expanded the supply of upholstered furniture to open up new markets. The Group’s upholstered furniture mainly includes sofas. During the review period, the revenue of upholstered furniture increased by approximately 16.4% to RMB130 million with a stable gross profit margin of approximately 33.4% for both FY2020 and FY2019. Products sales with relatively high gross profit margins increased among upholstered furniture, which partially offset the impact of the continued depreciation of the U.S. dollar against the RMB.
Outdoor and Sport-Type Furniture
Sports and recreational equipment mainly include table tennis tables, foosball tables and pool tables. The outdoor furniture mainly includes outdoor tables and stools. The revenue of other furniture amounted to approximately RMB160 million, representing an increase of 29% as compared the same period in 2019. The gross profit margin of other furniture decreased from approximately 29.5% in 2019 to approximately 28.0% in the review period, mainly due to the depreciation of the U.S. dollar against the RMB.
In terms of overall sales, sales from the United States is still the most significant among all geographical regions. The revenue derived from the sales of furniture product with the United States as the delivery destination decreased by approximately 2.1% compared to the same period in 2019 and the sales ratio to our total revenue decreased from approximately 71.8% to 67.1%, representing a decrease of approximately 4.7%, which was mainly due to the strategy adopted by the Group to actively expand downstream markets other than the United States. Sales revenue from mainland China decreased by approximately 23.2%, which was mainly due to the Group’s priority to guarantee furniture sales of overseas customers. Increment of sales in Malaysia, Canada and other regions were more significant. Sales in other regions increased by approximately 81.4% as there were significant growth of sales in Australia, Philippines and France. The Group strive to expand sales outside the United States to reduce reliance on the U.S. market and risk of potential trade frictions between the United States and mainland China.
Mr Zeng said, “During the pandemic, as large-scale restrictive measures have been implemented, the mainland China achieved significant strategic results in combating against COVID-19. In the first quarter of 2020, the pandemic in mainland China was largely brought under control and was one of the first countries to restore manufacturing production capacity and resume normal activities. Many companies resumed normal production and operation, the furniture companies also resumed normal production and operation, the furniture companies also resumed production and work in an active and orderly manner. At the same time, furniture manufacturing countries in Southeast Asia were still disturbed by the pandemic. As a result, demand from the supply chain in the global market had shifted to the mainland China, hence the booming development of the furniture industry in the second half of the year.”
Looking ahead, the global economy will continue to be affected by COVID-19, and the massive roll out of vaccines in various countries around the world and the development progress of drugs will play a key role in economic recovery. Challenges are accompanied by opportunities. Despite the uncertainties surrounding the evolution of the pandemic, the Mainland China remains the most competitive country in the world in terms of the supply chain when compared to panel furniture made in the United States which has long relied on imported panel furniture. In addition, as foreign economies begin to recover and working from home becomes the new norm, it is expected that demand for furniture products will gradually increase.
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