The company's decreased production volume has resulted in lower sales volume in 1HFY2023. As a result, the Zhongxin Fruit recorded lower revenue of RMB52.8 million in 1HFY2023, down 35% y-o-y. On the back of the lower revenue, gross profit also decreased to RMB12.6 million in 1HFY2023.
In its filing, the company says the average selling price (ASP) of concentrated fruit juices increased by approximately 33% in 1HFY2023 as compared to 1HFY2022 due to higher raw material costs.
The higher ASP of the concentrated fruit juices outweighed the increase in costs of sale contributed by higher cost of raw materials. Hence, Zhongxin Fruit was able to record a slightly higher gross profit margin of 24% in 1HFY2023 compared to 23% in 1HFY2022.
While the company continued to be profitable in 1HFY2023, sustaining the performance of the business remains challenging in the mid to long term, the company says in its outlook.
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Aside from unpredictable demand fluctuations and harvesting conditions as well as the ongoing Covid-19 situation which remains fluid in the PRC and globally, the company is also facing headwinds such as competition and cost pressures.
The company aims to mitigate the risks through cost control measures and productivity improvements, on top of continuing to drive the growth in sales by expanding its product offerings.
Shares in Zhongxin Fruit closed flat on Feb 8 at 2.7 cents.
