Top Form International, the world's largest maker of brassieres, yesterday warned that turnover and profits for the year to June might be worse than the previous year, after posting a 27 per cent slump in earnings for the six months to December last year. Top Form's share price fell 5.29 per cent to $1.79 yesterday following the announcement that turnover had fallen 6 per cent to $615.7 million and net profit plunged to $67.5 million. 'I see profits in fiscal 2006 worse than 2005. We may have a worsening profit situation in the coming months. For this year, it would be optimistic to forecast turnover growth. We may see a low single-digit decrease in turnover this year,' said Top Form chairman Willie Fung Wai-yiu. 'This year, we're facing a setback.' The reason for Mr Fung's pessimism is China's trade disputes with the European Union and the United States last summer which resulted in millions of brassieres, along with many other mainland garments being stuck in EU customs. The situation was resolved after a Sino-EU agreement in September, which included quotas on Chinese brassieres. Similarly, US quotas on Chinese textiles clouded the Sino-US textile trade for much of last year, with confidence returning after a Sino-US textile agreement in November, which imposed limits on Chinese brassieres and other items. Mr Fung said Top Form had set aside $20 million to pay quota fees for this financial year. Referring to last year's 'bra wars', Mr Fung said: 'We have seen the worst, but we have not yet seen the effect of the worst. There is a delayed effect of several months.' Top Form chief financial officer Michael Austin said Top Form transferred some production from its China factories to Thailand late last year. However, Thailand's production capacity and ability to make sophisticated brassieres were not as good as China's, so a delay and additional costs were incurred, said Mr Austin. Turnover for the interim period was worse than projections by KGI Securities and Core Pacific-Yamaichi but its net profit drop of 27 per cent was slightly better than the 28.7 per cent fall expected by Core Pacific-Yamaichi. 'We estimate Top Form to report a dismal first half with turnover remaining flat,' wrote Pauline Lau in a report. Core Pacific-Yamaichi projected Top Form's revenue would grow 5 per cent to $1.546 billion in the year to June, lower than earlier estimates.