On 8 Jan., 2016, Hubei Sanonda released its 2015 preliminary earnings estimate,
showing that the company suffered from dramatic declines in both its total
revenue and net profit in the past 5 years for the first time. Its total
revenue fell by 30.70%, and its net profit declined by 71.47%.
Hubei Sanonda Co., Ltd. (Hubei Sanonda) released the 2015 preliminary earnings
estimate on 8 Jan., 2016, showing that the company achieved a total revenue and
net profit of USD333.68 million (RMB2.17 billion) and USD21.58 million
(RMB140.32 million), down by 30.70% and 71.47% year-on-year respectively. This
was the first time for Hubei Sanonda to record dramatic declines in both the total
revenue and net profit during the period 2011-2015.
In years 2011-2014, Hubei Sanonda’s performance presented an upward trend. The
YoY rise of the total revenue exceeded 20% in 2011-2013, but increased by only 1.71%
in 2014. The YoY rises of its net profit all surpassed 50% in 2011-2014,
reaching 123.20% and 209.16% in 2011 and 2013 respectively. Nevertheless, that
its performance slumped in 2015, which reflected the depressed pesticide market
in China.
As the revenue and net profit sharply dropped, Hubei Sanonda’s operating
indexes showed different degrees of decline in 2015:
-
Earnings per share: USD0.04 (RMB0.2363), a YoY fall of 71.46%
-
Weighted average rate of return on common stockholders' equity:
6.83%, a YoY fall of 20.85 percentage points
Hubei Sanonda's financial performance, 2011-2015
|
Year
|
Total revenue, million USD
|
YoY change
|
Net profit, million USD
|
YoY change
|
|
2015
|
333.68
|
-30.70%
|
21.58
|
-71.47%
|
|
2014
|
481.5
|
1.71%
|
75.62
|
53.29%
|
|
2013
|
473.39
|
31.27%
|
49.33
|
209.16%
|
|
2012
|
360.63
|
23.36%
|
15.96
|
96.29%
|
|
2011
|
292.34
|
21.08%
|
8.13
|
123.20%
|
Source: Hubei Sanonda
Hubei Sanonda explained that China’s 2015 pesticide market was depressed with
fierce competition, resulting in weak demand for its products. Therefore, the
company’s income and gross profit margin reported significant drops, which was
the main reason for its poor performance in 2015.
Hubei Sanonda is a listed pesticide company with a complete industrial chain
for pesticides, and therefore it has outstanding cost advantages. Currently,
Hubei Sanonda possesses production chains for PMIDA-glyphosate,
pyridine-paraquat and spermine-acephate. It owns production facilities for chlor-alkali
and pyroelectricity. Its profits are primarily derived from glyphosate,
paraquat, 2,4-D, acephate and dichlorvos.
However, the glyphosate and paraquat markets were stagnant in 2015. Even
the exports of these two products were unsatisfactory. The weak external demand
for glyphosate led to a price slump. Price levels cannot be supported due to
the outstanding oversupply & overcapacity, poor exports, and increased
inventory. As a result, the gross profit margin of glyphosate fell along with
the price drop. Glyphosate manufacturers suffered with declining profits, and
some companies recorded financial losses.
As for paraquat, its price also continued falling due to the weakened demand at
home and abroad. The gross profit margin of paraquat declined.
The sales prices of the other major pesticides of Hubei Sanonda fluctuated because
of the sluggish market. Its incomes and profits from all products were impacted
by the weakening market demand.
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Tag: Hubei Sanonda