Hennes & Mauritz (H&M) Discusses China Quotas (HMRZF 3Q05 Conf Call Quotes)

European clothing retailer Hennes & Mauritz (ticker: HMRZF.pk) has taken steps to minimize concerns about future quotas on Chinese imports to Europe. Take a look at the following exchange during management's Q3 2005 earnings results conference call:

IR Manager Carl Henric Enhorning

More than 60% of our buying occurs in Asia and around half of this in China. In the beginning of the year we were cautious about moving production to China; we anticipated some sort of countermove from EU and USA if the volumes coming out of China would increase dramatically. Following the implementation of the new quota system this summer we have moved part of our production from China to nearby countries.

Analyst Christian Wierup

...our understanding is that in terms of the quota situation is that it's still better year-on-year in the fourth quarter than it was last year in terms of that you have six quota categories now and last year it was 100 categories with quotas.

Company Representative

...yes.

Analyst Christian Wierup

So that does mean that your purchasing price in China for the fourth quarter is most likely better than it was a year ago?

Company Representative

yes….

What we are saying is that the full benefit of the removal of the quota will fade away. It will still be better than the year before, but the fact is it will fade away through the fourth quarter and then possibly we gone on for this (indiscernible) Q1 and Q2 next year.

(Quotes are from the CCBN StreetEvents transcript.)