Firstextile AG's profitable business expansion stays on track
- Increase in revenue of 33.9% and net profit of 15.7% compared to H1 2012
- Earnings before interest and tax (EBIT) +19.8% year-on-year; strong EBIT margin of 21.5%
- The new production facilities as well as the repositioning of VARPUM brand are expected to strengthen future growth
Today Firstextile AG (FT8) has published its financial figures for the first half year of 2013, documenting that the company maintained highly profitable while successfully expanding its business activities. Revenue and net profit increased and the EBIT margin remained strong.
Firstextile's revenue rose considerably by 33.9% yoy to EUR 106.4 million in the first half year of 2013 after amounting to EUR 79.5 million in the same period of 2012. This development was achieved by the positive business performance in all three segments. As a result, gross profit went up by 31.7% to EUR 33.2 million (H1 2012: EUR 25.2 million), leading to a very sound gross profit margin of 31.2% (H1 2012: 31.7%). The company's earnings before interest and tax (EBIT) increased by 19.8% to EUR 22.9 million (H1 2012: EUR 19.1 million), resulting in an EBIT margin of 21.5% (H1 2012: 24.0%). In the second quarter of 2013 Firstextile significantly improved its EBIT margin quarter on quarter up to 22.6% (Q1 2013: 20.2%). Net profit increased by 15.7% from EUR 15.7 million in the first six months of 2012 to EUR 18.1 million in the same period of 2013.
Fred Yang, founder and CEO of Firstextile AG, is very satisfied with the results: "The half year report clearly provides confirmation that we have decided on the right strategy. We were able to increase revenue and net profits in all of our three business units. Our new production site, which is going to double our production capacity, as well as the repositioning of VARPUM, now a full range menswear premium brand, create an excellent basis for future growth" Richard Cao, CFO, explains: "We expect our new plant to start operations in the last quarter of this year. Consequently, in line with our business expansion, our expenditures have increased and margins have slightly decreased as a consequence. Taking into account our favourable market position, we confirm our full year guidance of total revenue between EUR 204 million and EUR 221 million and an EBIT margin of between 20% and 24% in 2013."
The revenue of the Fabrics segment grew significantly by 42.2% to an amount of EUR 66.5 million in the first six months of 2013 (H1 2012: EUR 46.7 million). Owing to a higher average selling price, gross profit climbed from EUR 12.7 million in H1 2012 to EUR 19.4 million in H1 2013. This corresponds to an increase of 52.7% and results in a gross profit margin of 29.2% (H1 2012: 27.2%). Simultaneously, the Fabrics segment contributed 62.5% to the company's total revenue after 58.8% in the same period of the previous year.
Also the Uniforms segment expanded its revenue considerably. A very strong increase of 58.3% yoy up to EUR 16.3 million in the second quarter of 2013 more than compensated the slight yoy decrease in the previous quarter 2013. In the first half year of 2013, overall revenue therefore rose to EUR 29.0 million (+20.7% yoy) after EUR 24.0 million in the same period of 2012. The segment's gross profit grew by 6.4% to EUR 5.8 million (H1 2012: 5.4 million), leading to a gross profit margin of 19.9% (H1 2012: 22.6%). This decrease in the first half year of 2013 is due to a lower gross profit margin in Q1 2013 (15.2%), which was largely compensated by the very strong gross profit margin of 23.6% in Q2 2013. The quarter-on-quarter development in this segment is dependent upon large orders. The quarter-on-quarter effects of certain large orders on revenue and, due to their lower margins, on gross profit -are all being well-balanced in the long run. The Uniforms segment's contribution of 27.2% to total revenue (H1 2012 30.2%) slightly dropped due to the strong increase in the Fabrics' revenue.
Since repositioning the VARPUM brand in spring 2013, Firstextile's third segment Branded Products offers a large variety of high-end fashion. Besides premium men shirts, the portfolio now includes additional fashion items such as suits, pants, sweaters and jackets. Thus, the segment's revenue was up by 52.5% yoy in the second quarter of 2013 and able to increase its revenue in H1 2013 by 25.3% to EUR 10.9 million (H1 2012: EUR 8.7 million). During the first six months of 2013, gross profit increased by 13.7% to EUR 8.1 million (H1 2012: EUR 7.1 million). The gross profit margin went down to 73.7% in the first half year (H1 2012: 81.2%) as the now offered traded products gain lower gross profit margins than self-produced premium men shirts. In sum, 10.3% of Firstextile's revenue was generated by the Branded Products segment in the first six months of 2013 (H1 2012: 11.0%).
As of today, the complete 2013 half year report can be downloaded from the company's website at www.firstextile.de, within the "Investor Relations" area.
Firstextile is the leading manufacturer of high-end yarn-dyed fabrics in the Chinese market with a market share of 9% in terms of volume in 2011. It also markets fabrics and shirts specifically designed for uniforms used by Chinese government institutions and enterprises, as well as its own branded men's wear for the Chinese premium market segment. The company operates modern production facilities in Jiangyin near Shanghai, China, which is one of the main centres of the Chinese textile industry, and it focuses particularly on high product-quality. Net proceeds from the successful completion of the IPO in November 2012, will primarily be used to double annual production capacity from the current 36 million metres to 72 million metres within this year.