HONG KONG – Motion and stationary upholstery manufacturer Man Wah Holdings announced it had a 28.6% increase in sales and a 16.8% increase in net profits for the year ended March 31.
The company said it had combined revenues of HK $21.8 billion, or US $2.77 billion, compared to HK $16.9 billion, or US $2.16 billion in the prior year.
Revenues in the North American market rose 23.7% for the year, to HK $5.4 billion, or US $689.3million, up from HK $4.4 billion, or US $557.3 million the year before.
Its profits totaled HK $2.3 billion, or US $286.3 million, compared to HK $1.9 billion, or US $245.2 million the year prior, a 16.8% increase.
The company said it had a net profit margin of 10.5% compared to 11.7% the year before, due largely to increases in raw materials costs. For example, it said leather prices rose 24.8%, steel prices rose 23.2%, wood, up 61.2% and chemicals and packing paper up 14.3% and 14.4% respectively.
The company also noted that transportation and port expenses rose by 31.7% while custom duties for exports rose 43.3%.
“In 2021, the spread of COVID-19 around the world, the significant appreciation of RMB, and
the rapid increase in the price of raw materials posed a challenging environment for us,” the company said in its annual financial report. “Faced with a complex and changing trade environment and the impact of the pandemic, the Group, while continuing its efforts in the prevention and control of the pandemic, has facilitated the resumption of work and production in an orderly way, continuously improved its product research and development capabilities, provided a comprehensive price band ranging from high, medium to cost-effective, as well as a complete product matrix of sofas, mattresses and accessories, and actively promoted domestic business development, thus effectively overcoming the adverse external impact.”
In further commentary related to the U.S. market, the company said that the recliner sofa category has been growing faster than the traditional stationary upholstery category, a trend that it expects to continue. And while the the U.S. market is growing slower than the Chinese market overall, the company said its group ranked among the top three resources in the U.S. recliner sofa market.
“The Group will try its best to expand its market share and achieve revenue growth in the future through leveraging its scale, efficiency, capacity, quality and cost control,” the company noted.
The report also said that the company produced high-end sofas in China that it exported to the U.S. that had a higher gross margin that offset the overall higher production costs related to tariffs on Chinese-made products.
Gabriele Natale, president of Man Wah Division 1, representing the North American Market, praised the Man Wah team for overcoming incredible obstacles during the year.
“We worked with our retail partners through unprecedented adversities to build a larger and more successful enterprise,” he said. “Man Wah continues to invest in a vertical global manufacturing infrastructure, creating efficiencies to offset the continuous cost increases of raw materials and transportation costs.”
He said the company also has broken ground on its Mexico factory, which is expected to begin production next month.
“This expansion will be a supplement dedicated to the North American Market, giving our retailers a broader choice of product/services to fill their needs,” he said.
Wong Man Li, Chairman, and CEO of Man Wah Holdings Limited, said the company will continue to provide its retail partners more diversified and competitive products that give them an advantage in their respective markets.
“We will also continue our commitment to sustaining the highest quality standards in manufacturing,” he added. “This past year has been challenging because of issues outside of our control. However, I believe that adversity makes a good company stronger. Man Wah will continue to improve our company from the inside out so we can continue to better support our customers.”