WUXI Little Swan Co Ltd posted a 38.87-percent rise in net profit in the first half of the year, despite a sales dip.

The rise in income was driven by strict financial controls adopted by the company.

Little Swan's profit rose to 66.74 million yuan (US$9.73 million) in the six months, or 0.12 yuan a share, but its sales dropped 14.59 percent to 2.42 billion yuan, the company said in a statement to the Shenzhen Stock Exchange yesterday.

"The slowdown in global economic growth and secondary loan crisis had a direct impact on consumer confidence. This caused export of white goods from China to drop significantly," Little Swan said in the statement.

The company's revenue from overseas markets fell 33.25 percent to 568 million yuan in the first half of the year, the statement said.

"The sale of refrigerators dropped 48.28 percent during this period, which brought down the company's revenue, but its net income still grew 38.87 percent as the management exercised tight financial controls," said Deng Yongkang, an analyst with Shanghai Securities Co.

Little Swan's sales expenses dropped 13.35 percent and management costs fell 34.5 percent during the period.

Meanwhile, the yuan appreciation and rising prices of raw materials have forced the company to rework its supply chain management, optimize production and adjust sale channels in order to maximize profits.

Little Swan is now focusing on developing drum machines and high-end business Bolun automatic washing machines as its core business after GD Midea Electric Appliances Co, China's largest publicly traded manufacturer of household goods, bought a 24-percent stake in the company earlier this year. This made Midea Little Swan's biggest shareholder.

Midea paid 1.68 billion yuan for 87.7 million Little Swan shares, raising its total stake to 29 percent.