---
title: "Salt Industry Competition Intensifies, Salt Enterprises Trapped in 'Revenue Growth Without Profit Growth' Dilemma"
description: "Recently, Yuntianhua Holdings revised its H1 2017 earnings forecast, expecting a profit of RMB 71.748 million to RMB 87.973 million, a decline of 20% to 35% compared to RMB 110 million in H1 2016. This is not just a single company's profit decline but reflects the broader impact of salt industry reform. Since the full implementation of salt industry reform on January 1, 2017, salt enterprises and consumers have experienced different outcomes: for salt enterprises, the business has become increasingly difficult; for consumers, it has become more affordable and diverse."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-07-22"
language: "en"
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# Salt Industry Competition Intensifies, Salt Enterprises Trapped in 'Revenue Growth Without Profit Growth' Dilemma

> Recently, Yuntianhua Holdings revised its H1 2017 earnings forecast, expecting a profit of RMB 71.748 million to RMB 87.973 million, a decline of 20% to 35% compared to RMB 110 million in H1 2016. This is not just a single company's profit decline but reflects the broader impact of salt industry reform. Since the full implementation of salt industry reform on January 1, 2017, salt enterprises and consumers have experienced different outcomes: for salt enterprises, the business has become increasingly difficult; for consumers, it has become more affordable and diverse.

Recently, **Yuntianhua Holdings revised its H1 2017 earnings forecast, expecting a profit of RMB 71.748 million to RMB 87.973 million, a decline of 20% to 35% compared to RMB 110 million in H1 2016**.
**This is not just a single company's profit decline but reflects the broader impact of salt industry reform**.
Our reporter noted that since the full implementation of salt industry reform on January 1, 2017, more than half a year has passed, but salt enterprises and consumers have experienced different outcomes: **for salt enterprises, the business has become increasingly difficult; for consumers, it has become more affordable and diverse**.

**Salt business faces 'revenue growth without profit growth'**
Recently, Yuntianhua Holdings announced that it expects net profit of RMB 71.748 million to RMB 87.973 million for H1 this year, a decline of 20% to 35% year-on-year.
When releasing its Q1 report in April this year, Yuntianhua Holdings had predicted net profit of RMB 130 million to RMB 160 million for January to June, with a change of 20% to 50%. At that time, the company attributed the profit growth to increased sales of compound fertilizers and specialty salts.
Regarding the reasons for lowering the performance forecast, Yuntianhua Holdings stated in the announcement that lower-than-expected revenue and net profit from compound fertilizer products, and increased non-operating expenses, contributed to the underperformance. Additionally, **although the company's edible salt sales volume increased by about 30% year-on-year, the adjustment of the product mix for salt products did not meet expectations, salt prices remained stable with a slight decline, and gross margins were lower than expected; the company organized the production and sales of edible salt as an FMCG, with management and sales expenses increasing by approximately RMB 10 million and RMB 30 million respectively compared to the same period last year, which were also major factors affecting net profit.**
In May this year, Wang Shengbing, the board secretary of Yuntianhua Holdings, stated at the annual performance briefing that with the advancement of salt reform, the company would focus on strengthening brand and channel construction for specialty salts this year, and expected sales expenses and revenue for specialty salts to continue to increase.

**Salt enterprises increase investment in specialty salts**
Yuntianhua Holdings is not the only company facing the situation of 'revenue growth without profit growth' in salt sales.
Yunnan Energy Investment, formerly Yunnan Salt Chemical, previously released its Q1 report, stating that during the reporting period, salt product production and sales volume increased significantly year-on-year, with incremental volume reaching a record high, and sales of edible salt outside the province surged. However, due to the liberalization of the salt market and prices, market competition intensified, and low-priced salt products such as 500g and 1000g specifications became the main competitive products, leading to a decline in the overall price of salt products. Revenue from the salt segment remained basically flat year-on-year, while gross profit decreased by 17.37% year-on-year.
Since the start of salt reform, due to market and price liberalization, salt prices have declined to varying degrees in many regions.
Official data obtained by our reporter shows that the Jiangxi Provincial Industry and Information Technology Commission disclosed that as of April 20 this year, 112 salt production and wholesale enterprises from outside the province had provided notification information to the commission as required by the state, and 8 enterprises entered the Jiangxi salt market, selling a total of 4,700 tons of salt, accounting for approximately 12% of the province's salt market share. The prices of major salt products in the mainstream market in Jiangxi Province remained stable at RMB 1.5 to 2 per 500g pack, a decrease from the previous price of RMB 2 per 500g pack.
A sales manager from a provincial salt group also told our reporter that salt prices in their market also declined. "In addition to out-of-province salt enterprises entering the local market, qualified production enterprises entering the distribution chain have also squeezed the original profit space to a certain extent. In this situation, we lowered prices, first to protect the local market, and second to compete for market share in other regions with speed."
However, the manager added that since ordinary small-pack salt products remain the mainstream in the market, the price reductions are mostly concentrated in the few-yuan product range. "The profit margins for these products are not particularly high, so our strategy is to reduce prices to increase volume, while allocating resources to cultivate the specialty salt market."
It is reported that differentiated specialty salts, including seaweed iodine salt, low-sodium salt, and sea salt, are seen by many salt enterprises as future profit growth points even before the salt reform. For example, Yuntianhua Holdings has developed more than 300 specialty salt products and launched more than 120 products. In H1 this year, the company stated during institutional research that it had successfully promoted specialty salts to 29 provinces nationwide, and its internet marketing platform would also be launched successively.

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