Bra maker not exactly in top form after closure

PUBLISHED : Wednesday, 04 July, 2012, 12:00am
UPDATED : Wednesday, 04 July, 2012, 12:00am


Top Form International is expecting its first loss since 2009 after it closed down its manufacturing operations in Shenzhen.

The company posted a HK$12.6 million net loss in 2009 because of the global financial crisis.

The bra maker's Hong Kong share price fell 3.3 per cent to 29 HK cents yesterday when the announcement - for the year to June 30 - was made.

The company will stop manufacturing in Shenzhen by the end of next month, chairman Willie Fung Wai-yiu said. 'Shenzhen is an operational hub to us,' he said. 'We just don't see Shenzhen as a viable manufacturing location. Closing the operation will hurt our profit and loss statement.'

The company attributed the loss mainly to the Shenzhen closure and continued weak sentiment in the US and EU markets, as well as operational issues at its Thailand plant.

'The company is continuing to pursue low-cost production opportunities outside China, which would lead to contingent costs and impact margins in the short term,' the company said in a statement.

China accounts for about half of the firm's manufacturing, Fung said. It also has factories in Cambodia and Thailand. 'Before the end of the year, China will be about 45 per cent of our manufacturing. I don't consider Guangdong the world factory any more. [It] conceded that role two years ago.' He expected one-third of production to be done in China in three years, with 15 per cent in Guangdong. It accounts for 28 per cent today, from 45 per cent five years ago and 70 per cent a decade ago.

Top Form is halting production in Shenzhen and reducing manufacturing in China because of higher labour costs and difficulties finding staff, Fung said. For the six months to December 31, 2011, Top Form had a net loss of HK$10.14 million, after a net profit of HK$47 million the previous year. Revenue fell 23.7 per cent in the six months to HK$570.88 million.