Yuyuan Group (00551) Fa Ying Guang expects profit attributable to shareholders to decrease by about 55% to 60% year-on-year in the first half of the year

According to the Zhitong Finance App, Yuyuan Group (00551) announced that the profit attributable to company owners for the six months ending June 30, 2026 will be reduced by about 55% to 60% compared to the profit of about US$171.2 million for the same period in 2025. According to the Group's current data, the above profit decline was mainly due to multiple challenges in the operating environment of the Group's manufacturing business. Weak demand led to a decline in sales scale, increased combined costs, and pressure on production efficiency, which had a negative impact on the Group's gross margin of manufacturing business during the current period.

Further analysis is as follows: 1. Insufficient demand and the impact of the external environment: Affected by macroeconomic uncertainty, tariff policies and inflation risks, terminal stocking demand was conservative, and brand customers were more cautious in placing orders. As a result, fluctuations in order demand increased during this period, and the Group's manufacturing business revenue decreased by 4.7% compared to the same period last year. Insufficient scale has an anti-leverage effect on operations, and tariff concessions also have a negative impact; 2. Impact of rising labor and manufacturing costs: In line with the Group's long-term production capacity layout, the newly built factory area continued to climb as planned, and the number of people in the manufacturing business increased year-on-year. Coupled with salary increases in various regions, overtime and other ineffective cost savings have not met the set targets, jointly driving up overall labor and manufacturing costs; 3. The impact of unbalanced production schedules: The Group's three major production area vacations overlapped in the first quarter of 2026, bringing many challenges to production schedules, and monthly orders from various factories in the second quarter became more volatile and difficult to schedule, and uncertainty in geopolitics and supply chains also caused further disruptions. Although the Group has actively coordinated the order pace to mitigate the related impact, various manufacturing plants continued to face the problem of high uneven production capacity loads during this period, leading to a decline in production efficiency and further boosting the unit cost of shoe manufacturing.

The Group will continue to closely monitor changes in the global political and economic environment, and will continue to use rapid response as the core guiding principle to balance demand, order scheduling and labor supply to consolidate operational efficiency.