Record profits for Man Wah Holdings
With improved efficiency, growing margins and declining expenses, furniture company Man Wah Holdings posted record profits for the six months to September 30.
Man Wah sells sofa products, most of which are reclining sofas, to retailers and distributors in North America, Europe and other overseas markets, and sells sofas and ancillary products to distributors in China. During the first half, total revenue reached about HK$2.980 billion (US$384 million), a decrease of about 5.3 per cent from the same period last year.
Despite unfavourable economic conditions, the group continued to expand its retail store network in China where it achieved revenue growth through a sharpened focus on store and online sales, promotion and service.
On the wholesale side, the group says it strengthened the management of its distributors’ stores in China through monthly on-site guidance sessions by company representatives in which standardised 10-module management practices were reinforced.
Between the end of March and September, distributors opened 127 Cheers sofa retail stores, taking the total to 1361. This market grew by about 42.1 per cent in the review period, with Cheers and Morewell sofa retail stores opening in first- and second-tier cities in China as well as Hong Kong.
Sofas and ancillary products were also sold directly to consumers through internet platforms such as TMall.
Management was also standardised and strengthened in the company’s own stores in China, with the product mix being adjusted and an incentive scheme introduced. At the end of September the company had 100 Cheers and Morewell retail outlets, the same as at the end of March. Revenue grew by about 14 per cent for the six months.
Overall, the group had 292 Cheers retail stores run by distributors at the end of September, up from 286 from March 31, plus 24 self-run Cheers stores, one fewer than at the end of March.
Apart from focussing on sofa production and sales, the group also produced and sold bedding products, chairs and other products to high-speed railways, cinemas, hotels and other business customers. This business grew by about 13.6 per cent over the half-year.
Meanwhile, building on its R&D advantage in the reclining sofa field, the group introduced more than 140 sofa models during the six months. The group has set up an intelligent manufacturing department dedicated to improving automation.
Total revenue for Man Wah for the first half eased by about 2.5 per cent to about HK$3.593 billion, while the overall gross profit margin increased to about 42.7 per cent from roughly 37 per cent for the same period last year. The increase was mainly because of the relatively lower price of major raw materials, a further decrease in the RMB exchange rate against the US dollar, and continual improvement in internal efficiency.