Yue Yuen Industrial (551) Q1 2026 earnings summary

Executive summary

• Revenue for 1Q26 was US$1,985.4mn, down 2.2% year-over-year, impacted by lower footwear shipment volumes and global economic uncertainty.

• Profit attributable to owners fell 53.6% to US$35.2mn, affected by production inefficiencies and higher labor costs.

• EBITDA declined 37.2% to US$79.0mn.

• Manufacturing revenue declined 5.5% YoY, while retail (Pou Sheng) revenue in RMB terms decreased 1.1% YoY, but retail profit attributable to owners rose 32.5%.

• Group maintained a strong cash position of US$926.8mn as of March 31, 2026.

Financial highlights

• Gross profit margin for the group was 21.7%, down 1.2pp YoY; manufacturing GP margin dropped 2.9pp to 14.8%, while retail GP margin improved 0.9pp to 33.6%.

• Gross profit fell 7.0% to US$431.8mn; recurring profit attributable to owners was US$37.7mn, down 50.6% YoY.

• Operating profit margin for the group fell to 3.4% from 5.4% YoY; manufacturing OP margin dropped to 2.0% from 5.7%.

• Non-recurring losses increased to US$2.6mn from US$0.5mn YoY, mainly due to fair value changes on financial instruments.

• Free cash flow for the quarter was negative US$85.0mn, but net cash flow was positive at US$39.6mn.

Outlook and guidance

• Brand customers remain cautious, leading to volatile order pipelines and production bottlenecks; management expects continued short-term pressure on production efficiency.

• Strategic focus on product mix optimization, digital transformation, and capacity expansion in Indonesia and India.

• Focus on operational flexibility, cost control, and early procurement to mitigate supply chain risks.