Zhongke Sanhuan: rare earth market underperforms on rising raw material prices
2017-11-07 17:53:01 [Print]
On October 27th, Beijing Zhongke Sanhuan Hi-tech Co., Ltd. announced the Q3 report of 2017. During the reporting period, the company achieved operating income of RMB2.773 billion, up by 8.77% YOY; net profit reached RMB201 million, down by 13.0501% YOY.
Affected by rising prices for rare earth raw materials, the company suffered a decrease in gross profit and net profit in Q3 declined accordingly. The cost has risen rapidly so far this year due to rising raw material prices of rare earth; however the price increase for upstream rare earth was stagnant affected by higher prices for downstream magnetic material. In the short run, the company’s average gross profit declined from 24.5% to19.3% due to difficulty in raising prices. Meanwhile, slipping profit also resulted in decreasing sales of the enterprises. Thus, the above two factors combined resulted in a significant year-on-year decrease in profit of Q3. In addition, the increasing exchange losses led to an increase of 270% in financial expenses, losses of about RMB43.79 million, which further pushed down the enterprise’ performance during the reporting period.
Affected by rising prices for rare earth raw materials, the company suffered a decrease in gross profit and net profit in Q3 declined accordingly. The cost has risen rapidly so far this year due to rising raw material prices of rare earth; however the price increase for upstream rare earth was stagnant affected by higher prices for downstream magnetic material. In the short run, the company’s average gross profit declined from 24.5% to19.3% due to difficulty in raising prices. Meanwhile, slipping profit also resulted in decreasing sales of the enterprises. Thus, the above two factors combined resulted in a significant year-on-year decrease in profit of Q3. In addition, the increasing exchange losses led to an increase of 270% in financial expenses, losses of about RMB43.79 million, which further pushed down the enterprise’ performance during the reporting period.
