Shishi, China -- Sooner Holdings Inc. a Fujian, China-based manufacturer of synthetic polyurethane synthetic leather (PU leather) for China's shoe industry, said footwear sales dropped 34 percent in the third quarter of 2011, as it also noted plans to invest in further expansion.
Sooner's total revenues for the third quarter of 2011 were stable at $7.0 million compared to $7.1 million for Q3 2010.
The PU leather expert said its gross profit decreased 19 percent to $1.3 million versus $1.6 million for Q3 2010, and attributes this to increasing costs for raw materials and labour costs.
"Our sales of footwear had decreased approximately 34 percent during the three months ended September 30, 2011, compared to same period in 2010," the company said.
Net income decreased 46.2 percent to $501 000 versus $932 000 for Q3 2010, due to increased administrative expenses in Q3. Also, in 2011 Sooner no longer had a preferential income tax rate, and is paying income tax of 25 percent in 2011 (12.5 percent in 2010).
Ang Kang Han, chairman and president, said in the groups's results statement that the liquidity imbalance on its balance sheet is primarily because the company is investing in expansion. "Overall, we believe we are extremely well positioned to capture market share due to insufficient local supply of PU leather and the high grade characteristics of our synthetic leather."
Sooner also has a new facility in San Ming, expected to commence operation by the end of 2011, "which will increase our capacity dramatically, and allow us to capitalise on the growing demand and new opportunities from our customers," said Ang.
Sooner Holdings designs, makes and distributes PU leather. Its Flying Eagle shoe unit also makes flip-flops and slippers for sale in China and abroad. For high-performance products, Flying Eagle uses high-density non-woven fabric as base cloth, with high performance PU leather used to make high-grade athletic shoes.
Sooner points out that Flying Eagle is in ShiShi City, Fujian, close to Quanzhou -- China's largest production base for sports shoes, sneakers and casual shoes. The region houses more than 3000 shoe manufacturers, producing over 1000 million shoes annually.