Core Viewpoint - The financial performance of Hengan International has declined, with both revenue and net profit decreasing in 2024, primarily due to rising raw material costs and negative public sentiment surrounding sanitary napkins [2][3]. Financial Performance - In 2024, Hengan International reported a revenue of 22.669 billion yuan, a year-on-year decrease of 4.62% [2]. - The net profit for the same period was approximately 2.299 billion yuan, down 17.93% year-on-year [2]. - The tissue paper business, which accounts for over 50% of revenue, generated 13.422 billion yuan, a decline of about 2.37% [2]. - The sanitary napkin segment saw the largest drop, with revenue of 5.678 billion yuan, down 8.09% year-on-year [2]. - The only growth came from the diaper segment, which achieved revenue of 1.261 billion yuan, an increase of 0.52% [2]. Cost Issues - Hengan International attributed its performance decline to rising raw material prices, particularly the cost of wood pulp, which increased in the second quarter, affecting third-quarter inventory costs [3]. - Overall gross profit fell by approximately 8.6% to about 7.325 billion yuan, with the gross margin decreasing to around 32.3% [3]. - The company faced significant pressure from rising raw material costs, which have been a recurring issue impacting profitability [3]. Industry Sentiment - Recent controversies regarding the safety and quality of sanitary napkins have negatively affected Hengan International's performance, with the sanitary napkin segment being the most impacted [4]. - Multiple brands, including Hengan's competitors, have faced scrutiny over product quality, leading to consumer doubts about safety standards [4]. - Analysts suggest that the entire sanitary napkin industry is under pressure due to these safety concerns, which could further impact brand development and consumer trust [4][5].
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