THE LUXURY-GOODS industry is recovering from its worst slump on record as consumers spend more on designer apparel and accessories, and distributors increase orders.
Swiss watch exports have increased by 22.4% in volume and 18.3% in value in the first three months of this year from the last, with Asia leading the growth.
Thanks to the recovery, SGX-listed Heng Long - one of the world's 5 top-tier tanneries of crocodilian leather - improved its 1Q2010 revenues by 41.4% year-on-year to S$10.9 million.
“Orders from makers of luxury handbags, accessories and watch-straps have been rising since the beginning of this year,” said its managing director, Mr Koh Chon Tong.
Heng Long’s tannery in Defu Lane 7 supplies to the world’s top luxury goods conglomerates such as LVMH and Richemont.
The French LVMH group owns a wide range of well-known luxury fashion and leather goods brands such as Fendi, Givenchi, Kenzo, Louis Vuitton, Marc Jacobs, Loewe, Celine.
In addition, it also owns luxury watch brands such as TAG Heuer, Zenith, Dior and de Beers.
The Swiss Richemont group owns luxury jewellery and watches brands such as Cartier, Piaget and Baume et Mercier.
LVMH reported an 11% year-on-year increase in 1Q2010 sales while Richemont crept up 1%.
Heng Long's gross profit margins were 24.5%, down 8.1 percentage points, due to higher production cost per unit.
This, plus a one-off foreign exchange gain in 1Q2009, resulted in pre-tax profits contracting 22.2% to S$1.1 million.
Net profit margins were 8.4%, down 6.9 percentage points.
Nevertheless, the company is riding on a positive trend of luxury brands and fashion houses actively expanding and diversifying into Asia to tap into its burgeoning luxury goods markets, said the management.
Heng Long’s (http://henglong.listedcompany.com) products are sold to Europe, Asia, America, Africa and Australia for use in luxury and fashion accessories such as handbags, watchstraps, boots and shoes, garments, belts and wallets.
Slump encountered by Heng Long in 2009 appears to be over.
Heng Long has a total production area of approximately 6,605 sq m with total production capacity of approximately 281,000 skins per annum.
Its stock price closed yesterday at 34.5 cents, giving the company a market capitalisation of about S$93 million.
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