Chinese seafood processor and shrimp exporter Zhanjiang Guolian Aquatic experienced a huge drop in profitability for the first half of the year, even as its revenues grew.
Guolian’s income in the first six months of the year was CNY 2.92 billion (USD 414.2 million, EUR 373.3 million) – up 13.7 percent year-on-year, while its profit, at CNY 12.3 million (USD 1.7 million, EUR 1.6 million), fell 93.3 percent.
Last month, Guolian flagged a sharp drop in profits for the first half of 2019 due to what it described then as increased spending with the goal of growing its domestic markets. However, its projection underestimated the company’s income, which it said would reach CNY 2.5 billion (USD 354.6 million, EUR 319.6 million) for the first six months of 2019 but which it has since withdrawn.
Guolian has sought to drive local sales by commencing crayfish processing and making more products customized for catering and fast food customers. The company has also signed up three new catering customers and developed 17 new products, including crayfish pasta, crayfish pizza, and fresh shrimp porridge.
Despite the overall grim nature of its Q2 report, Guolian said its domestic market sales rose 67 percent in the first half of the year compared to the same period in 2018, suggesting some measure of success for the company’s five-year strategy –announced in 2016 – of growing domestic market sales and of diversifying away from a dependence on the U.S. for export sales.
But investors have grown weary of the company’s stagnant profit growth. Guolian’s full-year net profit remained static at CNY 144 million (USD 2 million, EUR 1.8 million) in 2017 and 2018. And Guolian made more money four years ago – the firm booked a profit of CNY 19.8 million (USD 2.8 million, EUR 2.5 million) in profit for the first six months of 2015, according to company figures – suggesting profit slipped once the firm’s five-year growth strategy kicked in the following year.
