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Taiwan's footwear, apparel makers get Olympic boost

TAIPEI -- The Rio de Janeiro Olympics are providing a tailwind for Taiwanese footwear and apparel manufacturers who supply some of the big global brands. 

Pou Chen, the world's largest contract footwear maker, turning out shoes for such renowned brands as Nike, Adidas and New Balance, said the games typically boost demand.

"Over the past 16 years, every time we've encountered an Olympic year, our revenue from the footwear manufacturing business has almost always logged year-on-year growth, sometimes by more than 10%," said Pou Chen spokesperson Amos Ho. "We do think the Olympics bring about business opportunities."

For the first half of 2016, Pou Chen generated revenue of 140.74 billion New Taiwan dollars ($4.5 billion), up 6% on the year. The company's net profit rose 8.2% to NT$5.17 billion.

Feng Tay Enterprise, Taiwan's No. 2 footwear contract manufacturer, said the NBA All-Star Games lift the company's sales more than the Olympics, as it supplies basketball sneakers to Nike.

For the quarter ended June, Feng Tay's revenue grew 11.6% to NT$15.47 billion, while its net profit surged nearly 44% to NT$1.54 billion.

Taiwan's biggest apparel maker, Eclat Textile, has seen demand pick up gradually during the Olympics. Sales have otherwise been tepid since the second half of last year due to the global economic slowdown. The clothing maker counts Nike, Under Armour, Costco and J.C. Penny among its customers.

Eclat's revenue fell more than 10% to NT$5.82 billion for the three months ended June.

Still, Livia Wu, an analyst at Yuanta Investment Consulting, said Eclat's improving gross margin -- at 28% last quarter -- may indicate a strong recovery in the second half.

"We expect a healthy rebound in the second half of this year, and the robust recovery will likely continue into next year," Wu said.

Ally Chen, an analyst at UBS, cautioned that the demand bump brought by the Olympics could be short-lived.

"We would rather focus more on whether these footwear or textile makers could supply higher-end and innovative products to stay competitive in the longer term," said Chen.

Shares in Pou Chen have risen more than 6% this year to NT$46, while Feng Tay has slipped 11.6% to NT$148.5 and Eclat has fallen more than 14% to NT$388. Taiwan's benchmark Taiex index has climbed nearly 10% so far this year.

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