Kingenta’s Operating Revenues in 2017 Saw a Limited Growth, and Net Profits Have Dropped for two Consecutive Years

By CnAgri2018-04-28 10:24:29 Print Recently, according to 2017 annual report, operating revenues in 2017 registered 19.833 billion RMB, up 5.86% year on year; net profits stood at 715 million RMB, down 29.7% year on year. Along with a great increase in the whole fertilizer industry, Kingenta’s operating revenues have seen only a growth of 5% for two consecutive years, and net profits have decreased greatly for two consecutive years.
 
(1) Judging from specific business, the revenues of Kingenta’s five products:common compound fertilizer, water soluble fertilizer, controlled release fertilizer, nitro-based fertilizer and material fertilizer accounted for 86.5% of total revenues in 2017, of which operating revenues of common compound fertilizer increased by 5.96% year on year, and operating revenues of water soluble fertilizer, controlled release fertilizer, nitro-based fertilizer and material fertilizer decreased by 33.17%, 13.27%, 29.68% and 0.16% respectively. Seen in the perspective of region, operating revenues in the east, central and north took up 76.7% in the total revenues, but all saw a drop of 2%-5%. However Kingenta’s selling expenses in 2017 reached up to 1.456 billion RMB, up 43.1% year on year.      
 
(2)  Kingenta’s gross margin rates of marketing average at 16%-17%, but, since 2016, the gross margin rate of main fertilizer products has decreased, of which the gross margin rate of slow/controlled release fertilizer, nitro-based fertilizer and water soluble fertilizer had decreased by 8.7%, 1.03% and 15.5%.
 
 Facing a dilemma, Kingenta is actively exploring new marketing and service models. In 2015, Kingenta invested 2 billion RMB in creating Agricultural Material E-business Platform No. 1, which stopped operation in the second half of 2017; Jindong Flagship Store also closed down, so it had relatively great losses.