Noble Jewelry 2010 profit up to HK$7.6mn

Jewelry market benefitted from increasingly strong consumption sentiment, particularly in the Middle East and Asia, as global economy rebounds.

A leading jewelry service provider Noble Jewelry Holdings Limited (the “Company”) and its subsidiaries (“Noble Jewelry”) announced its audited annual results for the year ended 31 March 2011. 

Financial Review
The Group’s turnover rose by 23.4% to HK$643.4 million compared with HK$521.3 million in the previous financial year. Gross profit grew by 10.0% from HK$137.9 to HK$151.7 million. Net profit attributable to shareholders amounted to HK$7.6 million (2010: HK$3.1 million). Basic earnings per share were 2.8 HK cents (2010: 1.2 HK cents).

To reserve cash, the Board did not recommend the payment of a final dividend for the year ended 31 March 2011 (for the year ended 31 March 2010: Nil). 

Mr. Johnny Chan, Chairman of Noble Jewelry, said, “During the year under review, an upswing in the global economy saw the jewelry market benefit from increasingly strong consumption sentiment, particularly in the Middle East and Asia. Traditional markets, including the US and Europe also showed signs of recovery from the economic crisis of the past two years. These positive developments enabled Noble Jewelry to achieve significant improvement in the first half of the financial year, and the momentum continued in the second half year.” 

Business Review
With the faster growth rate in emerging economies, the Group’s sales in the Middle East soared by 35.8% to HK$165.0 million. Aided by an encouraging sales performance in the United Kingdom, sales in Europe recorded a growth of 1.1% to HK$165.1 million. Increased demand in mature markets drove up the sales in the America, which reported growth of 32.8% to HK$111.7 million. Led by a significant order volume from Indonesia, sales to Asia-Pacific countries (excluding the People’s Republic of China (“PRC”)) increased by 26.5% to HK$121.9 million. The Group was able to achieve respectable growth in its China business, with sales in the PRC market (excluding Hong Kong) rising by 54.5% to HK$63.5 million. Expansion in newly emerging markets in Africa and Indonesia has been progressing well as attested by encouraging sales growth. 

Through continuous efforts in diversifying both in terms of markets and customers, the Group obtained a greater volume of orders from Indonesia and the Middle East. Turnover from wholesale business, including Original Design Manufacturing (ODM) and Original Brand Manufacturing (OBM) grew by 21.2% to HK$585.8 million, accounting for 91.0% of total turnover. The Group’s business development strategies, including customer knowledge management (“CKM”) system and comprehensive Original Strategy Management (OSM) program, have successfully delivered sustainable growth.

The retail and brand business, though recorded steady growth with total sales of HK$29.2 million, still faced strong competition and challenges. As at 31 March 2011, the Group operated a total of 10 directly-operated stores (“DOS”), within China in cities such as Shanghai, Nanjing, Hangzhou and Panyu. The Group also continued to explore new modes of retail business during the year under review. It has set up a joint venture with Shanghai Chenghuang Jewellery, in which the Group holds 33% interest, for joint operation of a jewelry shopping mall and retail jewelry business of Noble Jewelry in Hangzhou, China, according to a Noble Jewelry report. 

The Group generated a turnover of HK$28.4 million from sales network collaboration business. By collaborating with a Shandong distributor, the Group sought to extend its distribution network across the northern PRC, carrying a variety of jewelry products. As for the jewelry road show business in selected locations within Sam’s Club, operated by Wal-Mart in the US, the Group is to conduct an operational review to optimize the business. 

Mr. Stephen Tang, Chief Executive Officer of Noble Jewelry, said, “To alleviate various cost concerns during the year under review, we have been dedicated to strengthening our cost control measures, including a higher degree of recycling of outmoded jewelry pieces, more direct sourcing from suppliers in India as well as bulk purchases of raw materials. We were also able to transfer part of the cost increases by lifting our selling prices to customers. As a result, excluding an one-off provision of HK$10.5 million for the underpayment of customs duty in prior years, net profit attributable to the shareholders for the year was HK$18.1 million, representing a 6-fold increase year-on-year.” 

Prospects
For wholesale business, the Group will maintain its focus on extending its customer base to different market segments, especially potential markets in the Middle East and Indonesia. Developing corporate clients who demand bulk purchases will be one of the Group’s priorities as well. Ongoing efforts will be placed on enlarging and optimizing the product mix.

As for retail and brand business, the Group will constantly review its existing DOS across the PRC and will consider closing less profitable stores when appropriate. Leveraging its collaboration with Shanghai Chenghuang Jewellery for establishing its jewelry retail business within jointly operated shopping malls, the Group will consider developing its DOS business through this platform, enabling the Group to enjoy shop rental and commission incomes. Furthermore, it will evaluate its business within Sam’s Club to review the sustainability of this investment. Meanwhile, greater efforts will be placed on collaboration with the Shangdong distributor and the wedding etiquette and ancillary services provider.

“Moving forward, apart from strengthening our established wholesale jewelry business, we will step up efforts in developing our retail distribution channels, while containing costs and consolidating our product development capability. Besides, we will remain active yet prudent in exploring more potential business collaboration opportunities with respective partners, in a bid to opening up new income streams and maximizing profit margins.” Mr. Chan concluded.