Download Globe Union half year Bulletin

Globe Union Group 2007 First Half Year Bulletin
1. Year 2007—First Half Year Financial Highlights
Profitability
2007
2006
Item/Period
Unit: NTD ‘000
＊
%
Growth
2005
2006
%
6months
%
6months
Rate
Full Year
%
Full Year
Net Sales
6,135,103
100.00
9,822,906
100.00
60.11%
9,720,078
100.00
12,810,444
100.00
Gross Profit
1,972,442
32.15
2,713,819
27.63
37.59%
3,265,126
33.59
4,023,299
31.41
NIBT
464,093
7.57
637,654
6.50
37.40%
362,880
3.73
843,505
6.59
NIAT
292,305
4.76
440,882
4.49
50.83%%
217,862
2.24
500,162
3.90
EPS
NTD1.15
NTD1.69
46.96%
NTD0.92
NTD2.15
8.36%
10.96%
31.10%
6.33%
13.25%
ROE (%)
＊
The 2007 6months results showed as above contains PJH Group 2007 half year operating outcomes.
Financials without the PJH Group
Item
2006 6months
Unit: NTD ‘000
%
2007 6months (W/O PJH)
%
YOY %
Net Sales
6,135,103
100.00
7,053,241
100.00
14.96
Gross Profit
1,972,442
32.15
2,030,271
28.78
2.94
NIBT
464,093
7.57
482,988
6.85
4.08
NIAT
292,305
4.76
387,882
5.50
32.70
Products Breakdown
Product/Period
Sales Breakdown
Year2005
Year2006
2007 6months
Faucet
65%
63%
44%
Ceramic
17%
17%
26%
Showerheads
9%
11%
9%
Accessories
9%
9%
12%
Kitchen Cabinet
TOTAL
Nil
100%
Sales/Period
Year2005
Year2006
2007 6months
ODM
55%
55%
58%
OBM
45%
45%
42%
TOTAL
100%
100%
100%
9%
100%
100%
Geographic Breakdown
Region/Period
Year2005
Year2006
2007 6months
US
85%
87%
67%
Europe
6%
7%
29%
China
2%
2%
2%
Other
7%
4%
2%
100%
100%
100%
TOTAL
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2. Group Overview
 Over 60% of Increase in Sales
For the first half year of Year 2007, the Group’s consolidated sales revenue grew
significantly by 60% to NTD9,823M due to healthy organic growth within the
business and the acquisition of the PJH Group. Organic sales growth of 14.96%
was achieved year on year for the first 6 months of 2007 and included continued
growth in business from Danze and Gerber, and with future growth expected from
the Home Boutique’s expansion into the China domestic market.
 Gross Profits
Despite a drop in gross profit margin % due mainly from the increasing raw
material costs and the integration of the PJH Group, the Group’s overall gross
profit in absolute dollars grew by 38%, achieving a value of NTD2,714M for the
year’s first 6 months’ results.
First and second quarter continued copper & zinc market price increases have
been a focus for the Group, as it was the main influencing factor behind the gross
profit % decline, particularly within the ODM channel. However, this cost is now
being passed on to customers from 3rd quarter through year 2008 and it is
expected that gross profit %’s will increase.

Expanding into the Targeted Markets、Broaden Product Portfolio
As the PJH Group joins the GU Group family, which not only strengthens Globe’s
regional channels in the European market enabling a more balanced global stance;
but it also helps fill-out Globe’s product portfolio by supplying bathroom-ware
products and kitchen cabinetry. On top of that, the goal of obtaining a more
balance OBM & ODM market ratio has taken another positive step forward.
In addition, by opening up the first flagship store in Shanghai early this April with
additional branches planned, GU is demonstrating its active determination in
penetrating into the China domestic household market via the Home Boutique
business.
3. Business Overview
 Over the last 6 months, the PJH Group has shown favorable performance in sales
compared to year 2006 6 month results, showing YOY growth rate of 9.5%.
Driving forces to such growths are the increases in supply to the New Build Sector
and increasing supply to private label business. From the recent consolidation
between the GU Group and the PJH Group, the integration is expected to show
full effects soon from September onwards, providing the Group with a strong and
growing position in Europe, while maintaining it’s cost competitiveness.
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 Danze continues to outperform its competitors in the North American region over
the last 2 seasons, showing a splendid sales growth rate of 22%. The favorable
outcome is attributed to the very competitive order fill rate of over 98% with
effective operation management in shipment within 2 days, as well as continued
focus on new products and quality. As to the following mid-term prospect,
despite the current unpleasant US residential market, we believe Danze’s market
position will be positive based on it’s newly launched showroom program together
with favorable marketing gains on repair & remodel markets.
 Although there has been a slowing in demand in the new construction market in
North America, Gerber’s first half year result tells otherwise--a YOY growth rate of
6.7% in sales; revealing an advancing gain in market share. For the next second
half year, the Company will continue its endeavor on brass showroom display
initiatives and drive up margins through increase in sale price & promotion in
higher-margin products.
4. 2007 Second Half Guidance
 In light of the recent USA “sub-prime” effect, we will continue to monitor the
subsequent impact to the global housing market. Nevertheless, so far the current
available information reveals that both Danze and Gerber in North America
continue to grow sales and hence market share, and that the demands in the UK
market remain favorable in the coming months as numerous major public building
programs have been promised. On the ODM side sales volumes and prices have
been maintained despite the larger retailers having been hit by the general US
market conditions.
 The recent market prices for copper & zinc show that raw materials have
increased significantly over the last 12 to 18 months, while data shows the gap
between market demand and supply has been gradually narrowed; therefore it is
anticipated that the raw material prices are unlikely to rise significantly.
 The implementation of unreclaimable input VATdeduction from 1st July onwards in
China, which will thereby affect profitability of those manufacturing factories
located in China. However, the ongoing costing measures implemented in GU
ShenZhen and Milim have had a positive effect, with such measures alleviating
the impact of VAT deduction brought to the Group. From a total Group’s
perspective, such taxation changes are however being passed onto customers in
pricing adjustments.
 Prospects for the coming mid-term is believed to be fair, as the Group’s global
marketing position begins to take effect: (1) Danze launching its Powder Room
product range, while reviewing the possibility of expanding its brand globally
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through distribution channels located in China and Europe; (2) penetrating into
kitchen cabinet markets and enlarging bathroom ware market shares worldwide
through PJH’s excellent distribution skills and channels, while improving its margin
by shifting the product outsourcing to the GU Group’s plants in China.
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