Disaster! Many giants suffered serious losses
Recently, many chemical companies such as Lihuayi, Huafon, Sinochem International, and Jilin Chemical Fiber have successively announced their performance forecasts for the first half of 2022. Judging from the published operating data, the performance of most companies in the first half of 2022 has declined sharply or even suffered losses, with both volume and price decreasing. In addition to the reduction in production and sales and product prices, the increase in basic raw material prices caused by the epidemic and high-priced crude oil is also one of the reasons for the decline in the operations of various companies.
Huafeng’s profits fell sharply
Polyamide 66 industry chain manufacturer Huafeng Chemical has released its 2022 semi-annual performance forecast. In the first half of 2022, the company is expected to achieve a net profit attributable to shareholders of 2.20-2.40 billion yuan, a year-on-year decrease of 42.9%-37.7%.
Reasons for the decline in performance: Affected by the downturn in the spandex industry, the company’s profitability declined.
Jilin Chemical Fiber suffered massive losses
Jilin Chemical Fiber is expected to lose 80 million yuan to 95 million yuan in net profit attributable to shareholders of listed companies in the first half of 2022, a year-on-year decrease of 296.23% to 333.02%. Among them, the Jilin epidemic caused a direct loss of 69.89 million yuan from the company’s production reduction.
Reasons for the performance loss: Affected by the COVID-19 outbreak in Jilin City in the first half of the year, Jilin Chemical Fiber took measures to reduce production. At the same time, the prices of raw materials, chemical auxiliary materials and energy increased significantly year-on-year. Insufficient production was superimposed on rising costs. Under the comprehensive impact, the final result was Profit fell sharply year-on-year.
Shanghai Petrochemical released a preliminary loss announcement for the 2022 semi-annual performance, stating that the company expects the net profit attributable to shareholders of the parent company to be -498 million yuan to -358 million yuan in the first half of the year, which is expected to be a loss compared with the same period in 2021; attributable to shareholders of the parent company The net profit excluding non-recurring gains and losses is expected to be -464 million yuan to -324 million yuan, which is expected to be a loss compared with the same period in 2021.
The company said that the main reasons for the expected loss in performance are the sharp rise in crude oil prices in the first half of 2022, the continued sluggishness of the chemical product market, the rise in prices of finished products less than the rise in raw materials, and the reduction in the company’s gross profit.
02 Hold on to the lifeline, crisis is a turning point
The current market situation is extremely severe, and the entire industry has entered a cycle of general losses. The situation is far worse than imagined.
Why?
The core problem is actually eight words: demand decreases and output increases!
Some people say that the industry has returned to a financial winter similar to that of 2008, while others say that we must be prepared to live in tight times for at least five years. However, the situation is far worse than imagined! Let’s first take a look at what’s going on outside?
On July 18, Dongguan Yi Electronics Co., Ltd. announced its closure, with 1,000 permanent employees. The notice stated that due to the impact of the global new coronavirus epidemic, the trade economy has been severely impacted, and the company has suffered from financial arrears due to the arrears of payment for goods sold by many cross-border e-commerce companies. The chain is broken and becomes unsustainable.
On July 15, Dongguan Chipeng Electronics Co., Ltd. issued a notice: Due to the impact of the epidemic and the decline in orders, the company decided to have a holiday from July 16 to October 31, 2022.
Shandong Guangfu Group has completely suspended production since July 19, and the resumption time is yet to be determined.
Affected by the decline in industry profits, a large steel plant with 6,000 employees has recently announced a complete suspension of production and a holiday for all employees!
The owner of a technology company in Anshan will have a holiday from July 14 to January 22, 2023. During the holiday, everyone’s treatment will be based on the minimum wage.
Another factory owner said helplessly that the factory had recently closed down, and the equipment worth 14 million yuan was sold as scrap for more than 1.4 million yuan. It was dismantled and cut on the spot for several days.
The boss of a factory gave all his employees a long holiday in July because of a serious decline in orders, leaving him helpless to stay in the factory.
Alas, a long sigh! At the end of the first half of the year, nearly 800 million people were in debt, 460,000 companies closed down, 3.1 million self-employed people were cancelled, and hundreds of millions of people will be unemployed in the future…
This “seven up to eight down” high temperature weather every year is the traditional off-season for the industry.
With demand continuing to be weak, a new round of brutal market competition has arrived. The biggest change is that I don’t know when the entire industry started talking about how to “survive” and no longer considered “development.” You know, crises and turnarounds usually go hand in hand.
Therefore, I hereby call on the entire industry to be mentally prepared to live under tight conditions for a long time. In order to survive, everything must be profitable, and we must do everything possible to make money and survive. Because no matter from the perspective of supply and demand or the international economic situation, this cycle will be really long.
Since the frequent lockdowns and production restrictions due to the epidemic in the first quarter, terminal demand has dropped significantly, the price of raw materials due to the Russian-Ukrainian problem has been rising, and the price of finished products has increased significantly.�. Inventories are at historically high levels, resulting in a large amount of working capital being occupied. Each factory’s ability to withstand market risks has hit rock bottom and is teetering on the edge of collapse! For example, a payment in arrears, a loan expiration, or a joint guarantee incident… will cause the factory to collapse in an instant.
So, no matter whether it is a big factory or a small factory, what should you do as the boss to hold on to the “lifeline” in this harsh situation?
How can we survive this major reshuffle and survive until the end? The answer is already in the question.
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