Arawana’s profit falls a second year as costlier commodities erode margins at China’s largest cooking oil processor
- Arawana’s 2022 profit fell 27 per cent to 3.01 billion yuan, after a 31 per cent decline in 2021, according to filing
- The Shenzhen-listed cooking oil processor, backed by the Kuok family, will publish its audited results on March 24
Yihai Kerry Arawana Holdings said its profit declined for the second year, as higher material costs stoked by the Russia-Ukraine war undermined margins at China’s biggest cooking oil processor.
The company, which sells processed oil and grains, offers an important indicator for China’s consumer sentiment. Combined with earnings slump by other consumer companies like PC maker Lenovo Group and retailer Wangfujing Group, they point to weak sentiments as China’s economy claws its way out of its post-Covid slump.
Even the largest companies with the deepest pockets have not been able to withstand the hit to corporate earnings from the Covid-19 pandemic and Beijing’s ham-fisted and over-the-top response to it. Rising raw material costs and labour shortage have also pressured earnings.
The average fourth-quarter profit of the constituents of the CSI 300 Index probably fell 12 per cent from a year earlier, deepening from a 3.4 per cent decline in the preceding quarter, according to Bloomberg data.
“Arawana’s profit margins were squeezed mainly by costs,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “Buying into consumer stocks needs to be selective now after a decent run-up.”