2016 Kingenta’s Profits Dropped

By CnAgri2017-04-18 17:11:38 Print

2016 Kingenta’s operating revenues stood at RMB 18.725 billion, up 5.5% year on year; but the net profits attributable to the listed company recorded RMB 1.005 billion, down 9.65% year on year. Even so, because Kingenta’s main products are NPK and new-type fertilizers, Kingenta still is one of few listed fertilizer companies who made profits.

As other fertilizer companies, due to a continuous drop in prices of single-element fertilizers in the first three quarters of 2016, NPK prices kept decreasing, influencing its operating performance; the cancelation of preferential policies for fertilizer made operating costs increase 8.73% to RMB 16.196 billion, higher than the growth of operating incomes.

However, the main reason is that Kingentia’s subsidiary in Germany acquired 24 subsidiaries of Compo AcquiCo the leading gardening fertilizer producer in the EU. Because product sales of the new companies acquired have obvious season features of busy season in the first half of the year and off season in the second half of the year. Kingenta consolidated 24 subsidiaries of Compo in the financial statements in the fourth quarter of 2016, as well as incidental charges during the process of acquisition, so Kingenta saw the loss of RMB 122 million in the fourth quarter of 2016.

The second reason is that the prices of agricultural products are always maintaining at a low level and basic-level farmers are less willing to purchase.