Yue Yuen Ind (00551) has announced that the net profit attributable to the company's owners for the three months ending March 31, 2026, is expected to decrease by approximately 50% to 55% compared to the profit of about $75.8 million recorded in the same period in 2025. Based on the Group's current assessment, this significant profit decline is primarily attributed to a complex and volatile global economic landscape, escalating geopolitical tensions, and seasonal misalignment, creating a more uncertain operating environment. These factors have led to an increase in per-unit manufacturing costs for footwear, negatively impacting the short-term profitability of the Group's manufacturing business. The details are as follows: 1. Demand Fluctuations and Tariff Impacts: Manufacturing business revenue decreased by 5.5% compared to the same period last year, resulting in operational deleverage. Uncertainty in the macroeconomic outlook has affected consumer momentum in end markets, leading brand customers to adopt a more cautious approach to ordering. Challenges in forward order placement and scheduling have caused short-term order demand volatility. While the average selling price saw a slight increase due to product mix changes, this was partially offset by the negative impact of tariff concessions. 2. Rising Labor Costs: In line with the Group's long-term capacity layout and the ramp-up of new factory zones, the number of employees in the manufacturing business increased by a low single-digit percentage year-on-year. Coupled with wage increases across various regions, labor costs were pushed higher. 3. Capacity Bottlenecks and Decreased Production Efficiency: The Ramadan and Eid al-Fitr holidays in Indonesia occurred earlier in 2026 compared to the previous year. Combined with the Lunar New Year holidays in Mainland China and Vietnam, production scheduling faced challenges due to seasonal misalignment, leading to severe capacity bottlenecks. Although the Group actively coordinated order pacing to mitigate the impact, capacity utilization across manufacturing sites remained highly uneven, putting pressure on short-term production efficiency and further increasing per-unit costs. The Group will continue to closely monitor changes in the global political and economic environment, as well as the potential impact of regional conflicts on shipping logistics and the stability of raw material supplies. It remains committed to its core principle of rapid response to balance demand, order scheduling, and labor supply to strengthen operational efficiency.