An expected drop in revenues from manufacturing led Yue Yuen Industrial Holdings to report a decline of 18 percent in comprehensive net income to $119.0 million for the first quarter ended March 31. Taking out extraordinary items, net earnings were still down by 13.8 percent to $90.8 million.

The world's largest shoe producer's revenues from manufacturing fell by 6.3 percent to $1.206 million during the period, with decreases across the board. Adding a new wholesale apparel distribution operation, the business inched up by 0.3 percent to $1.429 million, generating a gross margin of 20.1 percent.

On the other hand, the group's retail and distribution subsidiary, Pou Sheng, enjoyed a sales increase of 26.9 percent sales to $858.3 million, with growth of 17.7 percent in yuan renmimbi, allowing the group to post an overall increase in its revenues of nearly 8.9 percent to $2,287 million.

The company's shoe production facilities in Vietnam, China and other countries delivered 76.6 million pairs during the quarter, meaning a drop in volume of 5.1 percent as compared to the same period a year ago. Average selling prices were off by 1.3 percent to $15.75 per pair because of an unfavorable product mix, contributing to a decline in the gross margin from manufacturing of 2.3 percentage points, down to 18.7 percent.

Manufacturing revenues dipped by 5.8 percent to $938.0 million in athletic footwear, by 7.7 percent to $241.4 million in casual and outdoor shoes, by 9.4 percent to $27.0 million in sport sandals and by 10.3 percent to $123.0 million in soles and other components.

As previously reported, minority shareholders prevented Yuen Yuen from spinning off Pou Sheng a few weeks ago. In spite of higher operating expenses related to the failed effort, a boost in Pou Sheng's gross margin to 33.8 percent helped the subsidiary to record a 38 percent increase in its comprehensive net income in the local currency for the quarter, raising it to $20.9 million.