Rising wages add pressure
Hartlepool-based Stadium Group said its China operation was coming under increasing pressure from rising wages, but was confident that would not erode competitiveness, as it announced strong annual results today.
The AIM-listed provider of electronic manufacturing services said profits before taxation and sales of property increased by 23% to £2.66m for the year to 31 December - up from £2.16m in 2006.
Sales were up 6% to £40.76m, while net bank borrowing was reduced to £0.50m from £4.38m in 2006.
Nigel Rogers, chief executive of Stadium Group, said while new legislation in China had contributed to rising staff costs, a strong performance in cash-flow - which was boosted by the sale of freehold property - had helped to reduce debt.
“Although new legislation has effectively introduced a minimum wage in China, which has driven up costs, the country’s wage structures still compare favourably with other parts of the Far East and Asia,” he said.
“Our production facility in China will still allow the Hartlepool operation to source component parts at relatively low costs and remain competitive in the local market.”
The Chinese operation, which accounts for around half of the group’s sales, was bought in 2000 and comprises a design and commercial centre in Hong Kong and a production facility in Chang Ping City in Guangdong.
Stadium Electronics sources composite parts from its Chinese facility and supplies electronic manufacturing services to the consumer, industrial, medical and automotive markets.
“It was important to re-establish a pattern of growth after 2006 and we have gained critical mass in a number of markets, such as the medical and personal care sectors,” added Mr Rogers.
The electronics division employs 121 staff at the group’s headquarters in Hartlepool and a further 1,200 throughout sites in the UK and China.
The group expects pre-tax profits to rise to £2.8m in 2008 and £2.9m the following year.
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