Rising costs and falling product prices are the main reasons for the lack of profit growth of LED companies
From the annual report of a large domestic packaging company, it can be seen that for packaging companies, the company’s main business gross profit margin was 22.80%, a decrease of 9.82 percentage points from the same period of the previous year. The main reason is: to expand the market share of SMDLED products, the company Actively lowering prices, product sales increased significantly, and gross profit margin fell by 15.40 percentage points.
Most companies experienced a decline in product net profit margins in the first half of the year. The semi-annual reports of some companies also showed that although their operating income had increased, their net profit had fallen by nearly 20 to 30%.
According to the author's understanding, the gross profit margin of packaging companies has declined more significantly compared with the same period last year, mainly due to the decline in the price of LED devices and the increase in the price of raw materials. In addition, for some export companies, the appreciation of the renminbi has also affected the gross profit of export products.
Increasing operating costs and falling product prices are the main reasons for the lack of profit growth of LED companies. In addition, the LED backlight market demand in the first half of this year is not as expected. Various factories have turned their focus to the LED lighting market. If this situation continues to develop, Product prices may continue to fall, and "industry shuffling" and "bargaining competition" may also be inevitable.
The net profit of Ruifeng Optoelectronics in the first half of the year increased by 25% year-on-year. The main reason can be attributed to the focus on developing the lighting LED and medium and large-size LCD backlight LED market, especially the automotive application LED with a gross profit margin of 61.20%, which increased by 49.93% year-on-year.
In addition, the semi-annual report of Hongli Optoelectronics shows that during the reporting period, the company's net profit increased by 26.10% over the same period of the previous year. Among them, the gross profit margin of LAMPLED decreased by 7.2%, mainly due to the decline in sales prices of such products affected by fierce market competition; the operating income of SMDLED and LED application products increased by 49.98% and 48.48% year-on-year, mainly due to the expansion of sales.
In the general environment where the purchase price of main LED raw materials and the sales price of LED products have fallen, some companies have adjusted their product structure in a timely manner to achieve a counter-trend increase in profitability.
Only by adjusting and optimizing product structure in a timely manner according to market trends, continuously improving product quality and performance, even expanding production capacity at the right time, and exploring more cost-effective production processes, can led companies gain more initiative in the next round of market competition. This undoubtedly puts forward higher requirements and new challenges for led enterprise managers.
