Guangdong Tannery increase profits

Guangdong Tannery Ltd have reported that the continuing strength of China's economy has offset the effect of weaker international demand for their products. The company have reported net profit of HK$5.018 million (US$643,391) for the first six months of 2001, compared with a loss of HK$4.809 million (US$616,594) a year earlier. Sales for the period were HK$363.86 million (US$46.7 million), up from HK$338.79 million (US$43.4 million) last year. 'The consumer market in China continues to be buoyant in tandem with the solid growth of China's economy', said a company spokesman, adding that their initiatives to maximise return on assets and to consolidate their tannery business leave them 'well placed for continued growth'. The spokesman said the slowdown in demand in the leather market, reflecting the weakening international economy, meant they could not increase the price of their leather products during the period, despite rises in raw material prices. He added that increased competition in the leather market will impact on the company's ability to implement price rises and that the company have seen no evidence of improvement in the sluggish Hong Kong retail market. However, during the first half of 2001, the company were able to reduce production costs by 2% and operating costs for their Hong Kong leather operations by 4%. The company said that they recorded 'satisfactory growth' in leather production during the period and their Hong Kong business achieved a 'satisfactory level of gross margin'.