Net Profit of NBC's Parent Company Declines by up to 194.12%
- Chaileedo Press
- Aug 1, 2022
- 3 min read
Abstract: Recently, NBC's parent company, Green Pine, released a preview of its first half of 2022 results, with net profit declining by up to 194.12%. The main business of Green Pine is turpentine processing and cosmetic ODM business. The main reason for the decline is the company's cosmetics business sales revenue decline, etc.
In fact, this is not the first time that Green Pine has lost money. In the first half of this year, Green Pines released its 2021 results report. According to the report, last year the company achieved operating revenue of $547 million, down 4.44% year-on-year. Its net profit attributable to shareholders of the listed company was -$135 million, down 297.85% year-on-year. The loss was attributed to an impairment provision of $135.2 million for goodwill formed on the acquisition of cosmetics ODM company NBC.
CHAILEEDO learned that, due to the volatile performance, shortly after the release of the 2021 annual report of Green Pine, the Shenzhen Stock Exchange issued an inquiry letter to it asking Green Pine to explain the specific reasons for the decline in revenue last year by product type. It also required Green Pine to explain whether the decline in the company's revenue trend is sustainable taking into account the actual operation of the main business, the development situation of the industry and the acquisition of orders and the first quarter of 2022.
On May 20, Green Pine issued an announcement in response. According to the announcement, the enterprise's wholly-owned subsidiary cosmetic ODM NBC's performance decline last year was related to both the company's internal strategy of capacity expansion and staff expansion. It was also affected by macro factors such as rising raw materials, epidemic and industry regulation. These reasons, Green Pine in the previous financial report has been stated.
It is understood that Green Pine was listed on October 26, 2010. After the listing, Green Pine shares were mainly engaged in product development, production and sales business in the turpentine deep processing industry for a long time. After Green Pine completed the acquisition of 90% shares of NBC in April 2019, Green Pine added the design, development and manufacturing business of cosmetics such as facial mask, skincare products and wet wipes to its business segment. So far, the main business of Green Pine revolves around the above two segments.
As a wholly-owned subsidiary of Green Pine, NBC is mainly engaged in the cosmetic ODM business, which, according to the official statement, is one of the largest local integrated cosmetic manufacturers in China in 2021 with downstream customers mainly being cosmetic brand owners. Its main customers are UNIFON, Watsons, Hanhoo, Sewame, Dr. Plant and so on. Among them, the number of ODM products of UNIFON accounts for 25.63% of the overall, while Watsons accounts for 21.82% and Hanhoo and many other brands have their share.
Last year, NBC revenue achieved $371.6 million, down 6.05% and its operating profit -$9.8 million, down 119.89% with loss of $8.1 million.
More attention is paid to the fact that Green Pine announced the top five customers of NBC from 2018 to 2021 as required by the inquiry letter. Overall, NBC's top five customers are more stable, for example, Dr. Plant has been a top five customer for four years, Watsons, ReckittBenckiser and YSG for three years. The annual sales amount of the top five customers fluctuates is in the range of $117-$137.9 million and the closing book balance of accounts receivable fluctuates in the range of $33-$46 million.
It is worth noting that the first half of 2022 of Green Pine is still in the loss. According to the financial report, the company is expected to have a net profit attributable to shareholders of the listed company of $19 million to $25 million in the first half of 2022. Compared with a net profit attributable to the parent company of $26.7 million in the same period last year, a decline of 171.97% to 194.12%. In terms of operating income, it is expected to record $200 million to $215 million, a decline of 24.11% to 29.34% year-on-year.
Among the cosmetic business, Green Pine explained that due to the epidemic, macroeconomic factors and industry regulatory policies, the total retail sales of cosmetics in China declined year-on-year. The sales revenue of the company's cosmetics business dropped year-on-year. At the same time, the cosmetic production line renovation and expansion projects were completed and put into operation. The related depreciation and amortization expenses were increased, coupled with the increase in raw material prices in the past two years. The above factors posed a greater adverse impact on product gross margin when sales revenue failed to achieve growth.
Kommentare