Logo of Phnom Penh Post newspaper Phnom Penh Post - Rising cost of material slashes into GTI profits

Rising cost of material slashes into GTI profits

Garment workers sew clothes at Grand Twins International Factory in 2014.
Garment workers sew clothes at Grand Twins International Factory in 2014. Vireak Mai

Rising cost of material slashes into GTI profits

Taiwanese-owned garment manufacturer Grand Twins International (GTI) posted a 70 per cent decrease in net profit for its 2015 fiscal year, citing a decline in average selling prices against a rise in the cost of raw material imports, according to its filing yesterday to the Cambodian Securities Exchange.

The firm’s accompanying annual report showed that while revenue remained virtually flat last year at around $56 million – a meagre 0.3 per cent year-on-year increase – gross profit fell to $6.5 million in 2015, compared to $11.5 million a year earlier. After-tax figures showed total income fell to about $1 million last year, from $3.4 million in 2014.

Neither GTI, whose primary customer is German sportswear giant Adidas, nor its Taiwanese parent company could be reached for comment yesterday.

According to the garment-maker’s filing, however, the sharp decline in net profit was the result of four factors: the rising average wages of its workers, costlier raw materials, higher printing and embroidery costs, and a decrease in the average selling price of its products.

The company’s annual report showed only a nominal increase in labour costs, which rose to $9.4 million last year, compared to $9.3 million in 2014. This was despite a hike in the minimum wage that came into effect in January 2015, raising the monthly wage threshold by 28 per cent to $128.

Meanwhile, the majority of the company’s $5 million gross profit loss came from overhead costs on direct raw materials, which were supplied nearly entirely by QMI Industrial Co Ltd, GTI’s British Virgin Islands-registered holding company. Raw materials purchases topped $32.2 million last year, up from $28.7 million in 2014.

“The increased costs of raw materials and other expansions to the production chain were needed to comply with Adidas’s standards,” GTI said in its filing.

While GTI’s fourth-quarter losses last year showed a massive 450 per cent drop in profits, the devaluation of the stock has been marginal.

Yesterday’s share closing price sat unchanged at 4,100 riel (about $1.03), a recovery from the early-March low of 3,920 riel (about $0.98). The firm’s earning per share dropped to $0.03 for 2015, compared to the $0.11 per share in 2014, according to the filing.

MOST VIEWED

  • NagaWorld casinos set to reopen, schools to follow

    NAGACORP Ltd has requested that it be allowed to reopen its NagaWorld integrated resorts in Phnom Penh after the government recently approved casinos to operate again, provided they follow Covid-19 prevention measures set by the Ministry of Health. Mey Vann, the director-general of the Ministry

  • Cambodia armed with money laundering laws

    Money laundering will now carry a penalty of up to five years in prison while those convicted of financing terrorists will be jailed for up to 20 years, according to new laws promulgated by King Norodom Sihamoni and seen by The Post on Thursday. Comprising nine

  • Schools to be reopened in ‘three stages’

    With guidance from Prime Minister Hun Sen, the Ministry of Education, Youth and Sport, is in the process of reopening schools in three stages. But no timeline has been set, ministry spokesperson Ros Soveacha said on Thursday. Soveacha said the first stage will be to

  • Thai border crossings eased

    The Cambodian Embassy in Thailand said in an announcement on Wednesday that Thailand’s government has allowed certain passengers from several countries to enter its borders. The visitors must go back to their country immediately after their duties in Thailand are fulfilled, the embassy said.

  • Gov’t says tourism recovers slightly despite pandemic

    The Ministry of Tourism and the Phnom Penh municipal administration have recognised 33 tourism businesses in the capital which have consistently implemented safety measures for tourists and adhered to the code of conduct issued by the ministry. Recently, the ministry announced that tourism businesses had to

  • Mull ASEAN border opening, PM urges

    Prime Minister Hun Sen has requested that ASEAN launch a scenario for gradually reopening cross-border travel and trade between countries in the region. He said ASEAN has had more success combating Covid-19 compared to other regions. The prime minister’s request was made at the

  • Ministry reports 11 new Covid-19 cases, reiterates vigilance

    Minister of Health Mam Bun Heng has urged people to continue practising virus prevention techniques after 11 people tested positive for Covid-19 within two days after arriving in the Kingdom. Speaking on Sunday, Bun Heng stressed the importance of washing hands, wearing masks or scarves when

  • Koh Rong land ‘belongs to firm’

    Preah Sihanouk Provincial Administration spokesperson Kheang Phearum told The Post on Sunday that the 35ha being bulldozed by Royal Group Co Ltd in Koh Rong belongs to it after it was leased to it for 99 years by the government in 2008. Phearum said the land does

  • Nine on Indonesia flight Covid-19 positive

    The Ministry of Health on Saturday confirmed nine more imported cases of Covid-19. The nine ‒ eight Cambodians and one Indonesian, aged 22 to 26 ‒ arrived in Cambodia on Thursday via a direct flight from Indonesia and are receiving treatment at the Khmer-Soviet Friendship Hostipal in Phnom Penh.

  • Kingdom’s financial sector healthy

    Cambodia's financial sector remains on a sustainable growth path despite the Covid-19 pandemic squeezing crucial industries, National Bank of Cambodia (NBC) governor Chea Chanto said. Tourism, garments and footwear have borne the brunt of the Covid-19 impact, he said, whereas the financial and agriculture sectors