April 29 opening, two needle limit. The night before, LMZ released its report for the first quarter of 2021, with a net profit loss of 19.39 million yuan. Previously, relying on the transfer of assets, the two sides of the needle in 2020 to achieve profitability. Industry insiders said that with the stripping of non-performing assets, LMZ barely maintained its performance, but this is not a long-term solution. In the giant toothpaste market, it is hard to say whether LMZ can return to the main business of toothpaste and boost its performance.
Net profit and loss
On April 28, LMZ released its first quarter performance report for 2021, saying that during the reporting period, the company achieved a revenue of about 171 million yuan, a year-on-year increase of 24.72%; The net loss was about 19.39 million yuan and the non net profit was 5.39 million yuan.
On the net profit and loss related issues, Beijing Business Daily reporter contacted LMZ for an interview, but as of press, no reply has been received.
In the view of the industry, the net profit loss in the first quarter was mainly caused by the poor development of the main business of LMZ. A few years ago, LMZ made great efforts in diversified transformation, and did not pay much attention to the development of main daily chemical industry. It missed the important period of toothpaste development, and its products gradually withdrew from the mainstream market. Now, the sideline of LMZ is back to the main business, but the toothpaste market has been occupied by many brands, and its performance will be affected to a certain extent.
Public information shows that Zanthoxylum nitidum mainly engaged in toothpaste, hair cosmetics, soap, cream, perfume, toothbrushes, tourism products, household health products, packaging products production, sales of paper products processing, toothpaste production and sales of raw materials and other businesses.
Selling assets to stop loss
From the financial data in recent years, the development of LMZ has not been ideal. According to the data, during 2017-2019, the net profit of LMZ was – 144 million yuan, 21.72 million yuan and – 53.81 million yuan respectively; The growth rates were – 635.26%, 115.08% and – 347.73% respectively. In addition, from 2006 to 2019, the non net profit of LMZ deduction has been negative.
In 2020, after deducting non net profit for 14 consecutive years, LMZ will finally make a profit. According to the financial report data, in 2020, the operating revenue of LMZ will reach 685 million yuan, a year-on-year decrease of 42.24%; The net profit attributable to the shareholders of the listed company is 58006300 yuan, and the net profit attributable to the shareholders of the listed company after deducting the non recurring profit and loss is 902100 yuan.
However, the reason behind the non net profit deduction is the transfer of assets by Zanthoxylum nitidum. In November 2019, LMZ issued several announcements in succession, saying that it would transfer 80% of the equity of the real estate development company, 84.62% of the equity of the paper products company, and the creditor’s rights of the real estate development company, the paper products company, and the paper industry company. Including 370 million yuan of creditor’s rights of paper products company, 780 million yuan of creditor’s rights of paper industry company and 20876400 yuan of creditor’s rights of real estate development company, totaling 1174 million yuan of creditor’s rights. The object of transfer is the industrial investment group, the controlling shareholder of LMZ. At the time of transfer, the paper products company lost 107 million yuan and the real estate development company lost 4.2713 million yuan.
Regarding the transfer of assets, nitidz said that after the completion of the major asset restructuring of the paper products company and the real estate development company, although the operating revenue has decreased, the operating efficiency has improved, mainly due to the decrease of sales expenses and financial expenses (the increase of interest income) during the period, which has a greater impact on the current period.
Xu Xiongjun, a strategic positioning expert and founder of Jiude positioning consulting company, said that the sale of assets can solve the problem of performance loss to a certain extent, but it is not a long-term solution. For Zanthoxylum nitidum, fali toothpaste market should be the focus, especially the high-end toothpaste market dominated by Chinese herbal medicine. Before LMZ started, it relied on Chinese herbal toothpaste. It can be said that it is a time-honored brand in China. With its existing brand recognition, it may be able to help it achieve the re growth of its performance by re expanding the distribution of supermarket channels.
It’s not easy to return to the main business
Relying on the advertisement of “one good tooth, two sides of the needle”, two sides of the needle once had a sales volume of more than 500 million pieces, with a market share of 13%, second only to the two foreign brands of crest and CP. In 2006, the sales volume of LMZ reached the peak, and the sales volume of toothpaste business was 312 million yuan. However, with the transformation of its diversification strategy, the operating revenue of toothpaste dropped to 178 million yuan in 2007, and the performance of toothpaste began to decline from this year.
“From the former” No.1 toothpaste brand “to the present need to make profits through asset transfer, it is mainly due to the choice of diversification transformation and missing the golden age of toothpaste development.” Industry insiders said.
It is understood that in 2006, the business of LMZ increased the sales of drugs from toothpaste and other daily necessities, increased sucralose and real estate related business in 2007, and increased the production and sales of paper products and the import and export business of goods in 2009. Under the diversified expansion, the business of LMZ expanded to five sectors: daily chemical, paper, medicine, fine chemical and real estate.
However, diversification has not helped LMZ achieve performance growth. According to the data, in 2012, the net profit of LMZ after deducting non recurring profit and loss was 80 million yuan, of which the paper products company lost 53.09 million yuan and the real estate business only made 2.82 million yuan; In 2013, the net profit of LMZ after deducting non recurring profit and loss was 109 million yuan, including 55.12 million yuan for paper products company and 2.97 million yuan for real estate company; In 2014, sucralose business lost 36.13 million yuan, and paper products company lost 75.51 million yuan.
Based on this, divestiture of sideline assets has become an important way to maintain the performance of LMZ. Up to now, its business has only the main business of daily chemical and pharmaceutical sectors.
At the same time, returning to the main business of daily chemical industry has become the strategic focus of LMZ. At the end of 2019, LMZ once said that the company will unswervingly develop the main business of daily chemical products, expand the brand advantage, and gradually expand the sales market of daily chemical products driven by toothpaste products.
However, the toothpaste market has changed a lot. At present, Yunnan Baiyao and black people have a large market share in the toothpaste market. Yunnan Baiyao has become the first in the industry with a market share of more than 20% for two consecutive years, while black people rank second with a market share of 17%. In addition, foreign brands such as lion king, crest and CP also occupy a large market share. Under the multi brand layout, it seems that there is not much market space left for LMZ.
Beijing Business Daily reporter Qian Yu and Zhang Junhua
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