Economic Performance - In the first half of 2022, China's GDP achieved a year-on-year growth of 2.5% despite significant economic fluctuations due to the pandemic[60]. - The company’s performance in the first half of 2022 reflects its resilience in a volatile economic environment[61]. - The overall performance of the group is comparable to most peers despite the decline in profit from the feed segment[77]. Profitability and Revenue - Profit attributable to shareholders decreased by approximately 52.6% to RMB33,802 thousand, with a 35.5% decrease when excluding profits from the Southeast Asia feed business[75]. - The gross profit margin for the foods segment increased by approximately 10.9% year-on-year despite unfavorable market conditions[78]. - Food export income decreased by about 18.6% in the first half of 2022, but gross profit from food exports increased by approximately 55.7% due to R&D innovation and production automation[78]. - Domestic sales of food experienced a gross profit growth of approximately 7.4% year-on-year, aided by strategic responses to COVID-19 challenges[78]. - The total turnover for processed foods reached RMB 1,003,973,000, representing a 2.4% increase compared to RMB 980,076,000 in the previous year[90]. - The gross profit for processed foods increased by 10.9% year-on-year, totaling RMB 197,280,000[90]. - The gross profit margin for processed foods improved to 19.6%, up from 18.2% in the previous year[90]. - The total profit for reportable segments decreased to RMB 306,405,000 in the first half of 2022 from RMB 446,551,000 in the same period of 2021, reflecting a decline of approximately 31.4%[194]. Challenges and Strategic Responses - The company faced challenges such as rising raw material prices and unstable demand due to COVID-19 and African swine fever outbreaks[60]. - The domestic food consumption growth was impacted by the pandemic, but the company's timely adjustments in sales strategies helped maintain positive growth[61]. - The company emphasized the need for continuous management optimization and robust financial operations to cope with future uncertainties[60]. - The company’s adaptability and quick response to market changes were crucial in sustaining performance during challenging times[61]. - The feeds segment is focusing on R&D to provide higher value feed products and is expanding into niche markets beyond pig feeds[99]. - The meat segment adjusted its operational model to focus on differentiated product development and large customers, achieving results comparable to peers despite unfavorable market conditions[107]. Operational Efficiency and Management - The food business team successfully overcame logistics and distribution issues during the pandemic, providing stable support for operational development[62]. - The company is focusing on optimizing internal organization and enhancing management capabilities to improve competitiveness in a challenging business environment[68]. - The new plant in Bengbu is planned to feature automated production and digital management to strengthen the company's competitiveness[68]. - The management team remains confident in overcoming challenges through continuous improvement in management and competitiveness[69]. - The Group aims to enhance operational efficiency and overall industrial competitiveness through digital transformation and optimized supply chain management[86]. Financial Position and Cash Flow - The Group's cash and bank deposit balances decreased by approximately RMB25,712 thousand to RMB599,347 thousand as of June 30, 2022[114]. - Interest-bearing borrowings increased by approximately RMB33,074 thousand to RMB440,566 thousand, with the interest-bearing borrowings to equity ratio at 19.2%[118]. - Capital expenditure for the first six months of 2022 amounted to approximately RMB73,466 thousand, primarily funded by long-term bank loans[119]. - The Group's interest expense decreased by approximately 31.1% to RMB4,300 thousand, primarily due to a reduction in bank borrowings[121]. - The net cash generated from operating activities for the six months ended June 30, 2022, was RMB 80,719 thousand, compared to RMB 34,586 thousand for the same period in 2021, indicating a significant increase of approximately 133.5%[149]. - The cash generated from operations for the first half of 2022 was RMB 88,110 thousand, compared to RMB 50,373 thousand in the same period of 2021, an increase of approximately 75.1%[149]. Cost Management - Distribution costs were reduced to RMB 143,795,000 in the first half of 2022 from RMB 199,610,000 in 2021, showing a decrease of about 28%[194]. - Administrative expenses decreased to RMB 118,246,000 in the first half of 2022 from RMB 142,859,000 in 2021, a reduction of approximately 17.3%[194]. - Finance costs significantly decreased to RMB 4,300,000 in the first half of 2022 from RMB 11,965,000 in 2021, indicating a reduction of about 64%[194]. Market Focus and Product Development - The Group plans to focus on food as the leading segment while maintaining stable sales in feeds and diversifying market risks through product diversification[86]. - The Group is increasing efforts in developing direct sales customers and enhancing promotion of family-sized products across various retail channels[94]. - The Group is committed to product innovation by exploring new production technologies and expanding its product range to meet market demand[94]. Discontinued Operations - The Group disposed of subsidiaries in Vietnam and Malaysia in Q4 2021 to focus on its business in Mainland China, with the financial results of these subsidiaries presented as discontinued operations[200]. Accounting and Reporting - The interim financial report does not include all information required for a full set of financial statements prepared in accordance with IFRS, highlighting the need for caution in interpreting the data[162]. - The auditors expressed an unqualified opinion on the statutory financial statements for the year ended December 31, 2021, affirming the reliability of the financial reporting[163].
大成食品(03999) - 2022 - 中期财报