Weiqiao H1 hit by macroeconomic challenges

China's largest cotton textile producer Weiqiao has reported flat first-half net profit as the company faced macro economic challenges over the period.

For the half ended 30 June, net profit reached CNY545m (US$85m), which the company said was "approximately at the same level as compared with the corresponding period of the previous year".

Revenue fell 3.3% on a year-on-year basis to CNY8bn, while gross profit fell 2.2% to CNY1bn.

The company said the textile industry in china faced a "very complex macro-economic environment" during the first half. Weiqiao said the industry faced increased operating pressure as a result of "various unfavourable factors" including the slowdown of the global economic recovery, tightened monetary policy, rising interest rates and increased deposit reserve ratios as well as volatile cotton prices and other increasing production costs in China.

Over the period, China's textile exports increased, but the growth rate showed signs of slowing down. The company said that according to figures released by China Customs, China's textile exports rose by approximately 28.8% over the corresponding period of last year to approximately US$45.9bn, down by 3.4 percentage points when compared with the growth of 32.2% in the same period of 2010.

Commenting on the results, chairman Zhang Hongxia said: "As a result of the domestic and global macro-economic environments and the supply and demand of cotton, cotton price first increased and then decreased during the first half of 2011. Therefore, downstream customers adopted a wait-and-see approach, which affected the sales of the group for the first half of 2011. Despite the overall difficult operating environment of cotton textile industry in China, the group still maintained relatively steady operating results."