Xinjiang Zhonghe's 2023 financial report: Operating income slumps by 15.52% Y-o-Y

China-based Xinjiang Zhonghe recently released its 2023 financial report. In its 2023 performance report, Xinjiang Zhonghe disclosed that it attained an operating income of RMB 6.535 billion, marking a 15.52 per cent decrease compared to the previous year.

The net profit attributable to shareholders of the parent company reached RMB 1.561 billion, showcasing a 0.88 per cent year-on-year increase. The net cash flow from operating activities also stood at RMB 619 million, reflecting a 42.28 per cent decrease compared to the corresponding period last year.

Factors influencing the shift

Several factors primarily influenced the shift in operating income. Firstly, the period saw a sluggish growth in market demand, particularly with a decline in the demand for certain consumer electronic products.

Secondly, the industry's continuous expansion of production capacity in recent years heightened competition, resulting in decreased product prices. This, in turn, led to reduced income from electronic new materials products. Lastly, the company's decision to discontinue its trading business also contributed to the change in operating income.

During the reporting period, market demand experienced sluggish growth, particularly with a decline in the need for certain consumer electronic products. Simultaneously, the industry's continual expansion of production capacity in recent years heightened competition.

Price reduction 

This led to decreased prices for Xinjiang Zhonghe's high-purity aluminium, electronic aluminium foil, and electrode foil products, resulting in reduced operating income and gross profit margins compared to the previous year.

However, the rising demand for downstream electrical materials and the market for lightweight automobile components positively impacted the company's aluminium alloy and general aluminium products. As a result, sales volume and operating income for these products increased compared to last year's period, with the gross profit margin remaining relatively stable.