Recently, Sichuan Changhong released the third quarterly report of 2017. According to the financial report data, Sichuan Changhong continued the trend of the semi-annual report from January to June this year. The performance of the first three quarters has dropped sharply. This is no different from Sichuan Changhong. Adding to the bad news, it is not only embarrassing that the financial report data line is down, but the huge household appliance giants have repeatedly expressed embarrassment in materials and labor costs.
According to the Sichuan Changhong Third Quarterly Report, from January to September 2017, the company's operating income was 54.448 billion yuan, up 12% year-on-year; net profit was 167 million yuan, down 68% year-on-year; basic earnings per share was 0.036 yuan.
Regarding the reasons for the sharp decline in the company's performance, Sichuan Changhong explained that the decline in net profit of the company was mainly due to the drop in raw material prices and labor costs, which led to the drop in product gross margin.
It is worth noting that Sichuan Changhong had almost all of its net profit fell for eight consecutive quarters from 2014 to 2015. In the first quarter of 2017, the sales of Changhong TV industry experienced the worst start. In the first half of 2017, the net profit dropped by 66.55%.
This time and again the financial crisis, I am afraid it is difficult to explain the material price, labor costs can explain.
However, the deterioration of Changhong’s profitability is, of course, a lot of reasons, and it has to be broadly divided into two aspects, both internal and external.
One of the external factors is that, after the exit of home appliance consumption stimulus policies, the market is returning to rationality, and the growth rate of color TVs and refrigerators is expected to rebound but the rate of increase is lower; on the other hand, the continuous influx of Internet companies is adding to the online market. The vigorous promotion activities made Sichuan Changhong very tired in the fierce competition environment.
The internal factors or the main factors causing its profit to decline, on the one hand, Sichuan Changhong focused on the pursuit of scale and market share, as the cake grows bigger and the return rate of funds decreases; On the other hand, Sichuan Changhong’s diversification strategy is still undergoing transformation. The future development prospects are not yet clear.
However, as long as you are determined to do everything, there is room for turning around. Today, Sichuan Changhong builds five major industries in the mobile, financial and other new fields in addition to the main businesses of home appliance, military industry and IT distribution, and in addition it is a cross-border to the new energy sector. In this constant exploration, Changhong may find a development path that suits itself.
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