Weiqiao Textile maintains its market leadership in 2011

Weiqiao Textile Company Limited and its subsidiaries, the largest cotton textile producer in China, announced its annual results for the year ended December 31, 2011.

During the Period under Review, the sluggish recovery of the global economy and the sovereign debt crisis in Europe led to depressed demand for textile products and apparel in overseas markets. The growth in export value of textile products and apparel in China decelerated and the increase in export volumes was negligible. According to the figures released by the China Customs, the accumulated export of textile products and apparel in 2011 amounted to approximately US$248 billion, representing an increase of 20.1%.

Yet the growth rate declined by 3.5 percentage points compared to that in 2010. In particular, exports of textile products amounted to approximately US$94.7 billion, representing an increase of 22.9% and a decrease of 5.6 percentage points in growth rate over last year; while exports of apparel amounted to approximately US$153.3 billion, representing an increase of 18.4% and a decrease of 2.5 percentage points in growth rate over last year. Weakened demand from overseas markets together with the shifting of export orders from China to its neighboring countries gradually due to production cost consideration, resulted in a more fierce competition for global textile companies.

In 2011, a turbulent year for the textile industry, the inventory level of Weiqiao increased substantially due to weak market demand. Profits were negatively affected by a provision against inventory due to a significant decline in product prices.

For the year ended 31 December 2011, the Group's revenue was RMB15,232 million, a decrease of 14.8% compared with 2010. Profit attributable to owners of the parent was RMB246 million, representing a substantial decrease of 84.9% compared with 2010. Earnings per share were RMB0.21, representing a decrease of 84.6% compared with the previous year. The Board recommended payment of a final dividend for the year ended 31 December 2011 of RMB0.0594 per share (including tax), down 86.4%.

In 2011, the Group's production volume of cotton yarn, grey fabric, and denim were approximately 618,000 tonnes, 1,165 million meters and 102 million meters respectively. The production of cotton yarn and grey fabric decreased 14.2% and 10.9%, respectively, over last year. The production volume of denim remained at the same level as last year.

Commenting on the 2011 annual results performance, Ms. Zhang Hongxia, Chairman of Weiqiao Textile, said, "2011 was a challenging year for China's cotton textile industry. On the one side, the prices of raw materials fluctuated in the domestic market and production costs including that of labour increased. At the same time, in order to dampen domestic inflation, the PRC government tightened monetary policy, and with the appreciation of RMB, the financing costs reached an even higher levelfor textile companies and exports of textile products were adversely affected. In particular, the high volatility of the cotton price negatively affected the industry across the board."

"As a result, sales were weaker, the potential for inventory losses greater, and profits lower for most cotton textile enterprises. Furthermore, the adverse impact was felt throughout the industry value chain, affecting both confidence and operations."