On the evening of March 26, NVC Lighting (2.23, -0.12, -5.11%, real-time market price) (02222, HK) released its 2013 performance report. The report shows that the company's revenue last year was 3.774 billion yuan (RMB, the same below), a year-on-year increase of 6.4%, and its gross profit was 797 million yuan, a year-on-year increase of 4.7%. However, due to a significant decrease in administrative expenses and other expenses, the company's net profit increased 28 times to 245 million yuan.
It is worth noting that the promising LED business is actually not as profitable as traditional lighting products. NVC Lighting disclosed in the report that price wars are prevalent in the LED lighting market, and the profitability of LED products is lower than that of traditional lighting products.
Management and other expenses dropped significantly last year
Judging from the 2013 performance report released by NVC Lighting, there was no significant growth in revenue. However, the reporter noticed that NVC Lighting’s trade receivables last year were 1.160 billion yuan, while in 2012 this amount was 711 million yuan, an increase of more than 60%. In addition, NVC Lighting's net profit performance is eye-catching. The profit in 2013 was 245 million yuan, a year-on-year increase of 28 times.
The reporter learned that the reason why the company's net profit can increase at such a high rate is related to the substantial decrease in administrative expenses and other expenses.
In 2013, NVC Lighting’s management expenses were 259 million yuan, and in 2012 this expense was 316 million yuan. Under other expense items, NVC Lighting's data in 2013 was 2.618 million yuan, while in 2012 it was as high as 231 million yuan. It is understood that other expenses mainly include asset impairment losses, losses on the sale of properties, factories, equipment items and scrap materials, and donation expenditures.
NVC Lighting explained the significant increase in other expenses in its 2012 performance report. During the reporting period, the company's other expenses increased significantly during the same period mainly because the impairment loss caused by the group's acquisition of WorldCom and its wholly-owned subsidiaries in 2008 amounted to 220 million yuan.
WorldCom refers to WorldCom Investment Co., Ltd., which was established in the British Virgin Islands in August 2005. In order to strengthen the energy-saving lamp project layout, NVC Lighting acquired the company and its subsidiaries.
Regarding the specific situation of the cost changes, a reporter from "Daily Economic News" contacted relevant persons in the NVC Lighting Securities Department yesterday (March 27), but received no response.
The price war in the LED market is fierce
As a traditional lighting company, NVC Lighting has continuously increased its presence in the LED field in the past two years. In 2013, the company's revenue from LED lighting products reached 741 million yuan, accounting for 19.6% of total revenue.
NVC Lighting said in its 2013 performance report that as the concept of energy conservation and environmental protection has taken root in the hearts of the people, the green attributes of LED lighting have been widely accepted by the market. With the sharp decline in lighting product prices, strong government support and promotion, and the gradual implementation of the incandescent lamp elimination plan, the LED lighting industry has grown significantly in 2013 and is unique among many industries with weak market demand.
According to data provided by NVC Lighting Performance Report, the company's LED business growth reached 197.4% in 2013. However, the profitability of the company's LED lighting products currently lags behind traditional lighting products.
NVC Lighting performance report shows that the gross profit margin of the company's LED products last year was 16.4%, but the gross profit margin of some traditional products, such as T4 and T5 brackets, was 34.9%, and the gross profit margin of HID light sources was 59.9%; only CFL lamps had a lower gross profit margin than LED, at 15.1%.
NVC Lighting explained that the LED lighting industry is an emerging industry, especially the lighting application market, with a large number of companies and fierce price wars.
Wu Yulin, president of the Foshan Lighting Association, said in an interview with a reporter from the "Daily Economic News" that traditional lighting companies are currently transforming towards LED. In order to increase sales and seize market share, they have to sacrifice profits.
ANNA