Prada crocodile-skin supplier sees growth despite downturn.

Singapore-listed crocodile leather tanner Heng Long hopes to see 20 percent profit growth this year, helped by demand from regular customers such as Prada that it sees as resilient to an economic downturn.

The firm, which processes raw crocodile and alligator hide into leather for handbags, watches and clothes, also said it plans to double production capacity within the next five years.

“We are working toward matching the first half (profit growth figure),” Heng Long director Koh Choon Heong told Reuters in an interview on Thursday.

Heng Long achieved a 19 percent rise in net profit to S$6 million ($4.2 million) in the six months ended June. Revenue during the period grew nearly 17 percent to S$36.1 million.

“We are proxy to the luxury industry. The luxury industry fortunately for us is largely resilient to economic downturns — the rich always spend money,” Koh said.

Heng Long supplies crocodile leather to Italian fashion houses Prada and A. Testoni and handbag designer Nancy Gonzalez. It is one of the world’s largest crocodile tanneries, processing 280,000 skins a year.

The process of tanning raw crocodile hide to leather takes about a month. To make a luxury handbag, such as the Hermes Birkin bag, takes about three crocodile hides each costing around $300. The end product sells for around $45,000.

Although demand for such high end goods may wane in the United States due to economic woes, Koh expects emerging wealth from Russia and China to pick up the slack.

Source [ Reuters ]