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

  • LPG gas explosion injures 13 people, including foreigners, in Siem Reap

    An explosion on Wednesday at a liquid petroleum gas (LPG) car and tuk-tuk refuelling station in Siem Reap city has left 13 people, including an American and a Briton, suffering burns. The seven most severely burned, including a provincial police officer, were sent to a Thai

  • Over 100 Chinese nationals to be deported for online scam

    The Ministry of Interior is planning to deport 128 Chinese nationals after they were arrested in Preah Sihanouk province on Wednesday for their alleged involvement in an online money extortion scam. Y Sokhy, the head of the Department of Counter-terrorism and Transnational Crime, told The Post

  • More than 800 people test positive for HIV in 2018

    The National Aids Authority (NAA) said more than 800 people tested positive for human immunodeficiency virus (HIV) last year, joining over 76,000 others aged between 15 and 49 in the Kingdom already infected with the virus. The spread of HIV/AIDS in the Kingdom is showing few signs of

  • Rainsy vow to return on Nov 9 dismissed as ‘political warfare’

    An announcement from the Supreme Court-dissolved Cambodia National Rescue Party (CNRP) that its “acting president” Sam Rainsy would return to the Kingdom on November 9 was dismissed on Sunday as “political warfare”. The CNRP made the announcement on Friday after a permanent committee meeting chaired by