Zhongxin Fruit 5EG has posted earnings of RMB5.97 million ($1.11 million) for its FY2023 ended June 30, a 87.4% decline y-o-y from the RMB47.40 million reported in FY2022 due to a challenging operational environment and higher other operating income in the previous financial year.
Earnings per share (EPS) for FY2023 stood at RMB0.57, down from RMB4.49 in FY2022.
The company recorded lower revenue of RMB114.5 million in FY2023, down 19.3% y-o-y compared to its revenue of RMB141.9 million. Zhongxin Fruit’s cost of sales also decreased 13.2% to RMB90.53 million in FY2023.
In its filing, the company says some major apple producing areas in China suffered a heatwave in FY2023, greatly reducing the harvest of apples and resulting in a shortage of quality raw materials and higher procurement costs as compared to FY2022. After consideration, its subsidiary Yuncheng Zhongxin decided to reduce the level of production in FY2023.
On the back of the lower revenue, gross profit also decreased by 36.0% to RMB24.0 million for the financial year just ended. The relatively higher cost of sales, contributed by the higher cost of raw materials outweighed the increase in average selling price of the concentrated fruit juices, resulted in the company recording a lower gross profit margin of 21% in FY2023 as compared to 26% in FY2022.
The earnings slump is also attributed to the 85.6% y-o-y decrease of other operating income to RMB4.49 million compared to FY2022, in which Zhongxin Fruit was the recipient of a settlement payment of RMB27.5 million from Sanmenxia Tianyu Investment in relation to a successful indemnity claim.
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In its outlook, Zhongxin Fruit says that while it continued to be profitable in FY2023, sustaining the performance of its business remains challenging in the mid- to long-term, with market demand fluctuating and harvesting conditions remaining unpredictable.
Meanwhile, headwinds such as competition, cost pressures brought about by escalating logistical and shipping costs, inflation, rising interest rates, as well as the evolving geopolitical and trade conflicts will continue to present volatility in the economy and drive the company’s operating costs higher.
Shares in Zhongxin Fruit closed flat at 2.8 cents on Aug 25.
