#Media micro##People pay attention to #Profit is not enough, raise prices to make up. On the evening of October 12, Haitian Flavor Industry officially announced the adjustment of the ex-factory price of some products, with an amplitude of 3%-7%, and the new price will be implemented on October 25, 2021. It is worth mentioning that just on September 27, Haitian Flavor industry also issued a clarification announcement in response to the rumors of price increases, saying that "the price adjustment plan has not yet been determined." In two weeks, Haitian Flavor Industry quickly finalized the price increase plan or related to its lack of performance growth. According to the semi-annual report, Haitian Flavor Industry not only has the growth rate of revenue and net profit in the first half of the year far lower than the average level of previous years, but also its net profit in the second quarter has also recorded the first single-quarter performance decline since its listing.
But can price increases really bring sustainable performance growth to Haitian Flavor Industry? In the eyes of industry insiders, price increases can only alleviate the pressure on costs, and it is difficult to promote the performance of Haitian flavor industry to a higher level, especially in the condiment market with full competition and homogenization of products, and continuous price increases may lose some price-sensitive consumers. Therefore, in the face of the main business of gradually peaking in growth, Haitian Flavor Industry only relies on short-term price increases.
Official price increase 3%-7%
Rumors of price increases came true, and Haitian Flavor Industry officially announced the adjustment of the ex-factory prices of major products.
"In view of the continuous rise in the cost of raw materials, transportation, energy and other major raw materials, the company decided to adjust the ex-factory price of some products such as soy sauce, oyster sauce and sauce after research, and the adjustment range of the main products ranged from 3% to 7%, and the new price implementation began to be implemented on October 25, 2021." Haitian Flavor Industry said in the announcement.
In fact, this price increase is not a whim. At the end of September this year, there was news in the market that Haitian Flavor Industry may raise the price of some products such as soy sauce and oyster sauce by about 5%. In this regard, on September 27, Haitian Flavor also issued a clarification announcement, saying that "due to the continuous sharp rise in the costs of major raw materials, transportation, energy and other major raw materials this year, which has brought certain challenges to the company's operation, the company is evaluating whether to adjust the price of the product recently, but the price adjustment plan has not yet been finalized."
From the evaluation of product price adjustment to the formal implementation of the price increase plan in less than a month, Haitian Flavor Industry's "speed of light price increase" may be difficult to bear the pressure of performance. According to the financial report of the first half of 2021 released by Haitian Flavor Industry, the growth rate of the company's revenue and net profit in the first half of the year was 6.36% and 3.07%, respectively, and since its listing in 2014, the revenue growth rate of Haitian Flavor Industry has been maintained at about 15%, and the profit growth rate has been maintained at about 20%. Therefore, whether it is revenue or net profit, the performance growth rate of Haitian Flavor Industry has hit a new low since its listing.
In addition, Haitian Flavor Industry's revenue and net profit in the second quarter of this year both declined, creating a decline in single-quarter performance for the first time since its listing. Specifically, the operating income was 5.174 billion yuan, down 9.39% year-on-year; the net profit was 1.399 billion yuan, down 14.68% year-on-year. Affected by this, its stock price has also been declining, and its market value is almost waist-bending compared with the peak at the beginning of the year.
For this price increase, Chinese food industry analyst Zhu Danpeng said that under the blessing of a variety of factors, the price increase of Haitian products is inevitable. From the perspective of external factors, the continuous peak season has caused the prices of raw materials and accessories to rise sharply; from the perspective of internal demand, the entire capital market is not satisfied with the overall profit of condiments.
Industrial Securities reported in the research report that Haitian Flavor industry has experienced several product price increases between 2010 and 2017, the most recent of which occurred in January 2017, and Haitian Flavor Industry has raised the price of most of the company's products by about 5%. Now it is Haitian Flavor Industry that has started product price increases again after nearly five years.
It is easy to raise prices and reduce burdens, but it is difficult to find increments
Can price increases really bring sustainable performance growth to Haitian Flavor Industry? In the view of Shen Meng, director of Chanson Capital, price increases can only alleviate the pressure on costs, and it is difficult to promote the performance of Haitian Flavor Industry to a higher level.
"In the condiment market with full competition and homogenization of products, continuous price increases may lose some price-sensitive consumers." Industry insiders said.
Taking Fuling squeezed vegetables as an example, relevant data show that since 2008, Fuling squeezed vegetables have carried out at least 12 product price increases, the price has increased from the past 0.5 yuan / bag to nearly 3 yuan / bag, and in June last year, Fuling squeezed vegetables again in disguise, reducing the net content of the main products from 80g per bag to 70g. However, the price increase did not bring benefits to the performance of Fuling Cai, with revenue increasing by 12% year-on-year in the first half of this year, and net profit and deduction of non-net profit falling by 6% and 5% respectively year-on-year.
In this regard, Founder Securities also pointed out that in the current weak demand for condiments and the high overall inventory of the industry, the price increase has caused inventory transfer. There is still uncertainty about the smooth transmission of the price system, and the destruction of the price system by community group buying has not been completely stopped, and it is necessary to observe the sales situation after the price increase.
In the view of industry insiders, in the face of the main business of gradually peaking growth, Haitian Flavor Industry only relies on short-term price increases is far from enough, it must find new performance growth points.
In fact, in the face of performance pressure, Haitian Flavor has also tried to open up new areas and look for a second growth curve, but the effect is not ideal. Since the second half of 2020, Haitian Flavor Industry has successively entered the edible oil, hot pot base, rice and other tracks, launched a new edible oil brand "Oil Commander", vigorously promoted the "hot pot @ME" hot pot base, and launched a low-key "geographical imprint" series of new rice products.
However, from the revenue of Haitian flavor industry products in the first half of this year, it can be seen that soy sauce is still the main force, and new products are still difficult to pick beams. In addition to the three major products of soy sauce, oyster sauce and sauce, the revenue of other categories of products was only 1.125 billion yuan, accounting for 9.02% of the total revenue.
In Zhu Danpeng's view, the current Haitian flavor industry is not only facing the problem of raw material costs, in addition to the old product profits meet the ceiling, its layout of grain and oil, hot pot base and other new tracks are also relatively saturated, to edible oil as an example, at present, the market pattern of the edible oil industry has been quite stable, Haitian flavor industry wants to share the soup is not easy. Therefore, relying solely on price increases, it is difficult for Haitian Flavor Industry to break through the bottleneck of performance growth.
For how to boost performance in the future, the Beijing Business Daily reporter sent an email to interview Haitian Flavor Industry, but as of press time, he did not receive a reply.
(Guo Xiujuan, Wang Xiao, Yanhui)