Yuyuan industries (0551.HK), which manufactures footwear for Nike and Adidas-Salomon AG, said that the interim profit of the end of March 2010 should be 211 million yuan (US dollars, the same below), which is 3.3% less than the 218 million yuan in the same period of 09 years, 12.8 cents per share basic profit, HK $0.34 per share, and 4.3% to 2 billion 655 million yuan in the period.

Yuyuan pointed out that the orders from the leading footwear brand customers were stable, plus the strong orders from new customers, the total output of footwear was 136 million pairs, an increase of 4.7% over the same period last year, while the total production line at the end of March increased to 445.

As for the retail business which accounts for 22% of Yuen yuan's total turnover, Yuyuan said that the turnover of the business increased by 25.4% to 590 million US dollars compared with the same period last year, and the number of direct retail outlets in the mainland increased to 4311.

The rise in tax expenditure dragged down the net profit. The Yuyuan board of directors held that the group did not carry out any sales or production activities in Hongkong without paying the profits tax in Hongkong and had objected to the Inland Revenue Department of Hongkong on the assessment.