Sabina profits from US-China trade spat, works to increase OEM share
Lingerie maker Sabina revealed on Monday that it is benefiting from the US-China trade war, which has effectively increased its bargaining power vis-a-vis Chinese manufacturers, lowered OEM costs and will lead to a 1-3 per cent year-on-year in GPM (from 51.6 per cent).
It added and that it has recently received affected Chinese suppliers’ requests for more orders.
The company’s management are working to raise OEM share to 50 per cent within two years from the current level of 30 per cent as a way to cut production cost and cope with future minimum labour wage hikes, while maintaining the manufacturing processes under rigorous control to ensure that the products will meet the same quality standards as those achieved for Sabina's own brands.
Bunchai said the company was confirming its no-layoff policy but will not accept new workers to replace those resigning, and that the increase in the OEM activities involving production of the company’s products at Chinese factories will not lead to a need to enhance production capacity and build or expand factories but will improve the production efficiency and the company's capability to meet rising demand for (and sales of) products that are processed under rigorous control.
The company also stands ready to enjoy a baht appreciation given the Fed’s potential decision to cut interest rates earlier than expected, which will keep down the cost of importing OEM products from China. It seeks to increase marketing spending to boost purchases over the second half of the year, Bunchai Punturaumporn, chief executive of Sabina PCL (ticker symbol: SABINA), the manufacturer and supplier of Sabina lingerie products.