Companies

Yue Yen signals steep first-quarter profit drop of up to 55%

Apr 23, 2026 Hong Kong

The Hong Kong-based footwear manufacturer expects its first-quarter profit attributable to owners to fall 50-55% amid market headwinds, including fluctuating demand and reciprocal tariffs

Following a preliminary review of the unaudited consolidated results for the first quarter of the year (ending on the 31^st of March), Yue Yuen announced an expected decrease of 50 to 55% in profit attributable to owners of the company, as compared to a profit of approximately 75.8 million US dollars in the same period of 2025.

In a statement, the company said that this decrease “is primarily attributable to an increasingly complex and dynamic global economic landscape, the continued escalation of geopolitical tensions and seasonal misalignments, all of which have introduced greater uncertainties into the operating environment”.

Yue Yuen specifically highlighted the impact of fluctuating demand and reciprocal tariffs during the first quarter, during which time revenue from the manufacturing business fell by 5.5% year-on-year.

Amid macroeconomic uncertainty and weak consumer demand, brand customers adopted a more cautious approach to ordering, limiting early order pull-ins and disrupting scheduling. Although average selling prices increased slightly due to changes in the product mix, this was partly offset by the impact of tariffs.

This triggered what the company described as ‘operating deleverage’, whereby fixed and semi-fixed costs accounted for a larger proportion of a smaller revenue base, reducing profitability even before labour cost increases were taken into account. However, rising labour costs were the second pressure point.

In line with its long-term capacity strategy and the ongoing expansion of newly established facilities, Yue Yuen increased its manufacturing workforce by a low single-digit percentage year-on-year. Combined with wage increases across multiple production regions, this larger workforce pushed up the per-unit cost of output.

The manufacturer also noted that production scheduling was disrupted by seasonal misalignments, such as the overlapping Lunar New Year holidays in China and Vietnam, as well as the earlier Ramadan and Eid holidays in Indonesia. Despite efforts to manage order pacing, uneven production across facilities reduced efficiency and increased unit costs.

The Group has guaranteed that it will closely monitor global economic and geopolitical developments, including their potential impact on shipping, logistics and the supply of raw materials. It will also maintain a responsive approach to balancing demand, orders and labour in order to protect operational efficiency.

Image Credits: Jakub Zerdzicki on Unsplash

Hong Kong Companies Footwear Quarter Results Results Yue Yuen