Strike's aftermath to lower Yue Yuen's profits by US$112m

Yue Yuen Industrial's profits in the first half will be hurt by US$112 million in costs arising from a week-long strike at its Gaobu factory in April and increased benefits for its workers following that strike.

The Hong Kong-listed firm, which makes shoes for global brands including Adidas and Nike, suffered a US$27 million loss directly caused by the interruption of operations at the Gaobu factory in Dongguan, Guangdong, in a dispute over unpaid social security contributions.

The Taiwanese shoemaker said yesterday that including that loss, it would incur costs of US$194 million this year, the bulk of which would be due to provisions for and adjustments of employee benefit payments and monthly living allowances at the Gaobu factory and its other factories on the mainland.

The firm said US$112 million of the total costs would be reflected in the first-half results.

Yue Yuen was hit by another, brief strike at its Zhuhai factory late last month.

"The main reasons for making the employee benefit contributions are to assist the company in staff retention and recruitment under the increasingly competitive labour market conditions in China to ensure the company's normal business operation in the other factories," the firm said.