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FUQI International Inc. of Shenzhen, China, reported that revenue grew 122 percent to $55.1 million in fourth quarter ending December 31, 2007. Profits soared 253 percent to $7.4 million.
For the full fiscal year, sales rose 58 percent to $145.6 million and profits rose 133 percent to $13.5 million, or 86-cents per share.
Gross profit margin in the fourth quarter fell 120 basis points to 10.6 percent. Margins were hurt by a limited-time, promotional discount on design fees meant to increase brand awareness, and by fluctuations in gold prices during late November and early December. Gross profit however rose 98 percent to $5.8 million, which was attributed to higher selling prices for new jewelry designs as well as a generally more favorable pricing environment in the precious metal market. Net margin was 13.4 percent, up from 8.5 percent one year earlier.
Yu Kwai Chong, chairman of Fuqi International, said that results were slightly better than expected. "The momentum that we have sustained through the first quarter is encouraging. We are committed to our goal of building brand awareness and becoming the leading provider of luxury jewelry products in China."
For the fiscal year, gross profit doubled to $16.5 million and gross margin increased 180 basis points to 11.3 percent. Selling, general and administrative expenses nearly quadrupled to $4 million. Operating profit for 2007 increased 66 percent to $12.5 million, operating margin increased 50 basis points to 8.6 percent, and net income as a percent of net sales increased 300 basis points to 9.3 percent.
The company anticipates total wholesale revenue in 2008 of approximately $235 million to $250 million and expects to sustain long term wholesale gross margins in the 10.5 percent. Net income for 2008 is expected to be in the range of $15.3 million to $17.5 million, or between 70-cents and 80-cents per share (at 22 million shares.)
Chong said, "We continue to see strong traction in the luxury goods market in China, and believe that our strong and growing wholesale sales force, combined with the perception in China of high-end jewelry as both investment and ornament, will continue to strengthen our wholesale revenues."
"We are also looking forward to our pending acquisition of Temix, which is expected to be finalized in the next several weeks, and to begin contributing to Fuqi revenues in the third quarter, once we have all necessary government approvals. Temix will allow us to quickly ramp up our retail strategy, by bringing 45 counters and 5 stores on board," he said.
Source:http://www.diamonds.net
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