China's largest textile and military industry leader reports a net profit decline of over 30% in the first three quarters of 2023

Jihua Group Co., Ltd. (referred to as "Jihua Group") released its financial report for the first three quarters of 2023 on Oct 24. From Jan to Sep 2023, the company achieved operating income of 8.043 billion yuan, a year-on-year decrease of 35.39%. The net profit attributable to shareholders of the parent company was 108 million yuan, a year-on-year decrease of 37.7%. In the third quarter, the company achieved operating income of 2.729 billion yuan, a year-on-year decrease of 26.17%. The net profit attributable to shareholders of the parent company was 42.2268 million yuan, a year-on-year increase of 1550.42%.

The main reasons for the performance change, as explained by Jihua Group, are as follows: the 35.39% decrease in operating income from the beginning of the year to the end of the reporting period is due to the company's closure of domestic bulk trade business, resulting in a decrease in trade business income compared to the same period last year. A decrease in income is caused by delayed or reduced purchases by some key customers. The 37.70% decrease in net profit attributable to the parent company from the beginning of the year to the end of the reporting period is mainly due to the decrease in orders for military supplies and emergency materials this year, as well as delayed purchases by some key customers, resulting in a decline in order contracting compared to the same period last year. Additionally, sales of civilian products such as rubber shoes and textiles exports have declined significantly, leading to a decrease in the company's gross profit compared to the same period last year. However, the net profit attributable to the parent company in the third quarter increased significantly by 1550.42% is mainly due to the disposal of low-profit products in the same quarter last year, resulting in lower profit in the corresponding period.

Public information shows that Jihua Group is mainly engaged in the research and development, production, and sales of occupational clothing, occupational footwear, textile printing and dyeing, and protective equipment. It also conducts international trade-dominated commercial logistics business. As of the end of 2021, the company has more than 150 production lines for occupational clothing, 65 production lines for occupational footwear, and 24 production lines for leather shoes. Its subsidiary production enterprises are distributed in 23 provinces, autonomous regions, and municipalities directly under the central government, which allows the company to timely and effectively meet market demand with significant scale advantages.

Jihua Group stated that in 2023, the company aims to maintain its market share in the traditional military and police uniforms market, consolidate its position as a core supplier of military products, and enhance the brand's influence based on increasing efforts to explore markets such as workwear and matching accessories.