Chinese snack nut industry has shown negative trends in recent years
Several listed snack food companies in China have recently released their Q3 2022 reports. The reports show that the performance of some leading companies dropped in Q3 2022, and some made losses.
Bestore Co., Ltd. (Chinese: 良品铺子, 603719:SH) released its Q3 2022 report on 30 October. The report shows that the company achieved operating revenue of CNY 7.00 billion (USD 961 million) in the first three quarters of 2022, up 6.61% year-on-year, and net profit of CNY 287 million, down 8.80% compared with the same period of the previous year. Operating income for Q3 was CNY 2.1 0billion, down 1.80% year-on-year, and net profit was CNY 94.13 million, declining 23.60% year-on-year.
The Q3 2022 report of Three Squirrels Inc. (Chinese: 三只松鼠, 300783:SH) shows that the company achieved revenue of CNY 5.33 billion in the first three quarters of 2022, down 24.57% year-on-year and net profit of CNY 93.50 million, a decrease of 78.86% year-on-year. For the third quarter, it achieved revenue of CNY 1.22 billion, falling 32.63% compared with the same period of the previous year, and a net profit of CNY 11.37 million, declining 87.43% from Q3 in the previous year.
Shanghai Laiyifen Co.,Ltd (Chinese: 来伊份, 603777:SH) reported operating revenue of CNY 3.25 billion and a net profit of CNY 70.70 million for the first three quarters of 2022. The net profit for Q3 was CNY -39.80 million.
The main reason for the decline in profits in the snack food industry is because of sales channel reform, price competition and damaged inventory backlog, which also reflects the enormous pressure on these snack giants.
The reasons for the more significant decline in net profit, Three Squirrels said, is mainly due to the fluctuation of revenue and gross profit in the phase of the company's strategic transformation period. The more significant reason is that Three Squirrels carried out distribution reform and offline store optimization. In recent years, due to the epidemic and other factors, Three Squirrels offline stores have experienced price fights on different channels, with no price advantage in offline channels, on the one hand, leading to customer loss, and on the other hand, preventing the willingness of franchisees.