Zhejiang Shenghua Biok Biology Co., Ltd. (Shenghua Biok) earned a decreased revenue but an increasing net profit in 2015, according to its 2015 annual report released recently. Specifically, the company’s revenue fell by 24.8% to USD156.2 million year on year, while its net profit reached USD21.6 million, a 68.7% increase over last year.
Falling price of dicamba in 2015 led to decreases in revenue and gross margin of the company.
Shenghua Biok is chiefly engaged in production and sales of biopesticides, veterinary drugs, feed additives and Zirconium-based products. Insecticides and herbicides represented by abamectin and dicamba respectively are the major categories of pesticides to the company. In 2015, pesticide business brought in USD33.5 million for the company, a 53.5% year-on-year decline compared with last year.
According to Shenghua Biok, the company has been encountering with decreases in output, sales volume and product price in recent years due to severe overcapacity in the involved industry or reduction in consumption of products it’s dealing in, and its profits from major businesses consequently suffered from decline.
The company is equipped with a 1,000t/a capacity of dicamba technical. In 2015, the company’s output and sales volume of the product was 973.9 tonnes and 457.50 tonnes respectively; the output-sales ratio was 47.0%.
Owing to new capacity launched by major competitors of the company such as Jiangsu Yangnong Chemical Group Co., Ltd. and Jiangsu Changqing Agrochemical Co., Ltd., the supply of dicamba technical on the market increased largely in 2015. Price of the product fell consequently from USD21,499/t (a historical peak) to less than USD16,892/t in 2015. As a result, Shenghua Biok’s sales of dicamba-based products declined by 59.8% year on year in 2015, and the profits slumped as well.
Table: Revenue and gross margin of main business of Shenghua Biok, 2015
Electricity and steam
Source: Shenghua Biok
Shenghua Biok will shift its focus away from traditional products including pesticides.
Shenghua Biok said that it would be proactively seeking for new profit growth points and set entertainment and culture businesses as its strategic development priorities. The company is planning to acquire the Chengdu-based Blaze Loong Group to march into the online game industry, laying a foundation for forming an entertainment-based business platform. Furthermore, the company intends to transform its organization structure from the traditional mode to divisional structure. It will set up an entertainment economic business unit and a digital economic business unit, and existing businesses such as pesticides will be incorporated into a traditional economic business unit.
Shenghua Biok will maintain its existing major businesses but will be dedicated to reduce production costs through technological innovation and upgrading in order to enhance its profitability. Besides, the company will speed up peeling off businesses and departments with heavy losses or low competitiveness to keep the balance among existing major businesses and reduce the pressure brought to its overall profits.
NOTES TO EDITORS
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