The fiercer the price war is, the more the carton

The fiercer the price war, the more the carton factory loses: what is the worst result of the falling paper price for the carton factory

release date: Source: Tertiary Factory Alliance Views: 5660 copyright and disclaimer

core tip: in the first half of 2019, the packaging industry was in a storm, and a large number of tertiary factories faced a decline in revenue and profits. However, it should be noted that despite the wide range of price rises in the second half of the year, there is no explosive rebound at present; With the support of Sino US trade disputes, the deterioration of demand may be more intense. Abusing the fist technique of hurting yourself first and then the enemy, the price war is more likely to be that you can't support yourself first

the first half of 2019 can be said to be a bad start for paper enterprises. Due to the sharp decline in paper prices, almost all major domestic paper mills have seen their revenues and profits fall. In terms of revenue, the revenue of Liwen paper fell by 20.91% this year, and in terms of net profit, Chenming paper was "far ahead" with a decline of 71.43%

for paper mills, the impact of falling paper prices on revenue is immediate. There is no doubt that falling paper prices = falling revenue. However, for the tertiary plant, has the decline in raw material prices benefited everyone? Paper price decline = cost reduction = revenue increase, does this equation hold? The author raked in the financial reports of several leading packaging enterprises on this question

Hexing: gross profit margin 5. Maintenance personnel and maintenance departments should achieve three inspections and one handover (self inspection, mutual inspection, full-time inspection and one handover pass). The rise is mainly due to the continuous decline in raw material prices

with a total operating income of 12.166 billion yuan in 2018, Hexing surpassed Yutong and became a well deserved No.1 for Chinese packaging enterprises. According to the interim report disclosed by Hexing packaging on August 30, 2019, Hexing achieved a total operating income of 5.49 billion in the first half of 2019, and the hardness of test quenched steel, tempered steel, annealed steel, surface hardened steel, plates of various thicknesses, cemented carbide materials, powder metallurgy materials and thermal sprayed coatings decreased by 6.2% year-on-year; The net profit attributable to the parent company was 130million, an increase of 11% year-on-year

no mistake. In the first half of 2019, when terminal demand contracted, Hexing's total revenue fell, but its profit increased by 11%. Moreover, it is worth mentioning that due to the decline in paper prices, the gross profit margin and final net profit of Hexing were boosted

according to the financial report of Hexing, the largest source of revenue contribution of Hexing is the "carton" business. Specifically, the operating revenue of "carton" is 3.38 billion, accounting for 61.6% of revenue and 14.4% of gross profit margin. Because the price of raw materials continued to decline, the gross profit margin of cartons increased, and the gross profit margin of carton products increased by 1.4 percentage points, which promoted the company's comprehensive gross profit margin to 12.7%

let's take another look at the carton raw material cost announced by Hexing

q1 the average price of corrugated paper/carton board was 3716/4450 yuan/ton respectively, a year-on-year decrease of 4.43%/7.18%

the average price of Q2 corrugated paper/carton board was 3477/4211 yuan/ton respectively, falling 8.8%/5.4% month on month

Yutong: the improvement of exchange rate and raw material factors are the main factors for the increase of gross profit rate

Yutong technology disclosed its interim report on August 29, 2019, and the company achieved a total operating revenue of 3.68 billion in the first half of 2019, an increase of 12.1% year-on-year; The net profit attributable to the parent company was 300million, with a year-on-year increase of 11.2%

unlike Hexing, Yutong achieved both revenue and net profit in the first half of 2019. Moreover, when the total revenue of Yutong was lower than that of Hexing, it also realized the anti excess of net profit. The improvement of exchange rate and raw material factors are the main factors for the increase of gross profit margin (the so-called improvement of raw material factors is the decline of paper price)

according to the financial report, the average price of corrugated paper/whiteboard/coated paper/double offset paper, the main raw material of Yutong products, decreased by 17.46% year-on-year/4.33% year-on-year/19.98% year-on-year/20.85%, and the gross profit increase brought to the boutique box/carton/manual/self-adhesive was +5.10/+2.15/+2.08/-6.43 percentage points respectively

let's take another look at the carton raw material cost announced by Yutong

the average price of white cardboard/carton board in the first half of the year was 5108/5326 yuan respectively, a year-on-year decrease of 21.40%/13.05%

it is obvious that both Hexing and Yutong are in line with the scenario of paper price decline = cost reduction = revenue increase. So, in other places, can this equation also hold

meiyingsen: the low-level competition of "price war" brings pressure

in the first half of 2019, meiyingsen achieved an operating revenue of 1.466 billion yuan, an increase of 3.01% year-on-year; The net profit attributable to shareholders of listed companies was 165million yuan, a year-on-year decrease of 5.30%

compared with Hexing and Yutong, meiyingsen's financial report is not so bright. From the perspective of business structure, "light packaging products" are the main source of operating income of mayingsen (light packaging products are light corrugated packaging products and color printing products). From the perspective of gross profit, mayingsen also reflects a completely different situation from the two giants: the paper price fell, and mayingsen's gross profit margin fell instead

unfortunately, the impact of the decline in paper prices on the company's profits is not reflected in the earnings data of mayingsen, but another sentence found may give you a glimpse of the reasons for the decline in profits. "However, with the development of many enterprises with certain competitive advantages in the industry, the industry competition is becoming increasingly fierce. Some enterprises in the industry even adopt the low-level competition mode of" price war ", which brings certain competitive pressure to the leading enterprises in the industry."

in other words, although the paper price fell, the dividends of the decline in paper price were swallowed up by this low-level competition mode due to the price war waged by many peers. The decline in paper prices has had a negative impact on packaging enterprises such as mayingsen

this situation is not unique. Even from the perspective of the group of carton factory owners contacted by the students of Xiaoyin, this situation can be said to be particularly common. In particular, the recent peak season is approaching, and many carton factories have even reduced carton prices several times in January, causing chaos in the industry

printing and packaging are not separated. Coincidentally, in an article published by printing entrepreneurs, the revenue of the new third board printing enterprises in the first half of 2019 also reflects the adverse impact of the decline in paper prices on the revenue of enterprises: in the first half of the past year, there were significantly more enterprises with declining revenue than in previous years. Moreover, many enterprises fell by more than 10%, some as high as 30% or 40%

among the reasons picked out by the author, the factors of sales price decline and revenue decline caused by the price war ranked third. For printing and packaging enterprises, price reduction is a lingering pressure. Dameicheng said that "one of the reasons for the decline in revenue is that the unit price of customers has fallen significantly under the same output"; Siping packaging said: the industry competition is intensifying, and the sales price is declining; Jin Hengyu said: the industry competition is intensifying, and some customers of the company require price cuts, resulting in low profits or even no profits for some customers

for printing and packaging enterprises, price reduction is a lingering pressure. Why in the financial statements of Hexing and Yutong, the equation of paper price decline = cost reduction = revenue increase can be established, but it can't be put into a slightly smaller packaging enterprise? Everyone must know

in the first half of 2019, the packaging industry was in a storm, and a large number of tertiary factories were facing the situation that the revenue potential of medical devices and medical packaging could not be underestimated and the profits fell together. However, it should be noted that despite the wide range of price rises in the second half of the year, there is no explosive rebound at present; With the support of Sino US trade disputes, the deterioration of demand may be more intense. Abusing the fist technique of hurting yourself first and then the enemy, the price war is more likely to be that you can't support yourself first