Foton Industrial (00420) announced that Jiangyin Fuhui, a subsidiary of the company, has been in a loss since 2022...
According to the Zhitong Finance App, Futian Industrial (00420) announced that Jiangyin Fuhui, a subsidiary of the company, has been in a state of loss since 2022. The reduction in order volume prevented its production capacity from being maintained at a standard level to cover the fabric factory's shareholder costs. As a result, Jiangyin Fuhui has surplus fabric production capacity in 2024, which is expected to worsen operating and financial performance.
In view of these circumstances and to further reduce losses, the group decided to further reduce fabric production capacity while retaining only the weaving capacity of the fabric factory operated by Fuhui in Jiangyin. Since February 2024, the group has properly completed all existing orders. The remaining orders from Jiangyin Fuhui will be transferred to other fabric factories within the group, while Jiangyin Fuhui will continue to accept fabric knitting orders.
Jiangyin Fuhui will terminate the labor contracts or provide severance compensation for all existing employees. The amount of compensation has been prepared in fiscal year 2023.
Since the remaining orders from Jiangyin Fuhui will be transferred to other fabric factories within the group, a further reduction in the production capacity of the fabric factory operated by Jiangyin Fuhui will not have a significant impact on the Group's overall fabric operations. On the other hand, this decision will reduce costs and increase the Group's overall profitability, and maintain shareholders' interests.