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Denise Tsang

Pegasus International Holdings, which makes sports shoes under the Nike label, said attributable profit declined 6 per cent to US$15.62 million last year, due largely to a hefty rise in depreciation costs.

 The provision rose to $5.4 million as a result of $32 million expenditure in new production facilities.

 Chairman Thomas Wu Chen-san said the company would continue to see depreciation charges this year as it proposed to spend $10 million to boost production capacity.

 A global reduction in the production of Nike sports shoes took its toll on Pegasus. Sales contributions from the sports shoes fell to 30 per cent from 43 per cent.

 That was despite a 16 per cent jump in turnover to $141.32 million last year.

 Casual shoes and sandals were the top contributors, generating 70 per cent of the turnover.

 Nike was the single largest client of Pegasus, which represented 64 per cent of turnover last year.

 'Contributions from Nike will shrink to about 48 per cent this year partly because we will further expand our brand portfolio from the current 20 labels,' Mr Wu said.

 In the year to last December, net profit margin was squeezed to 11.2 per cent from 13.7 per cent, because of the depreciation charges.

 Profits from ordinary activities before taxation fell 5.5 per cent to $15.78 million, but estimated earnings before interest, tax depreciation and amortisation rose 8 per cent.

 Earnings per share was down 24 per cent to 2.2 US cents.

 A final dividend of four HK cents was recommended compared with the previous three cents.



Pegasus runs into lean times as Nike cutbacks hit earnings