Lier Chemical Co., Ltd. (Lier Chemical), a Sichuan based listed company, released a report recently saying that its sales revenue is USD69.13 million in 2010, up 15.74% year on year. However, its net profit is USD11.77 million in the same period, down 23.20% year on year. The sharp decrease in net profit was caused by the lower gross profit margin in 2010 which witnesses huge decrease.
The performance is in line with the company's expectation previously when the company forecasted the net profit in 2010 was to decease by 10% to 40%.
The gross profit margin of Lier Chemical has been ranking the top among domestic pesticide technical producers (listed companies) in recent years. However, the gross profit margin of the company decreases a lot in 2010, which impacts its net profit.
According to Lier Chemical's H1 2010 report, its gross profit margin is 30.36% in H1 2010, down a lot from that of about 40% in the same period of 2009. It is estimated that the company's gross profit margin is about 30% in 2010 .
In fact, the gross profit margin of Lier Chemical has showed downtrend in recent years. The gross profit margin of the company was above 45% in 2007, but it decreased to about 35% in 2008. It witnessed some increase in 2009 thanks to the government's increase in export rebate and the low raw material cost. However, in 2010 the gross profit margin starts to decline again.
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