Extracted from the Annual Report 2023
Dear Shareholders,I am pleased to present to you the Group’s performance for the financial year ended 31 December 2023 (“FY2023”). This year marks the first year of gradual repairment in global economy and consumer confidence, with obvious economic structural differentiation and new growth driver introduction. While there had been a positive start to the year—witnessing a reopening rebound together with progress on inflation reduction, global activity dwindled towards the end of the year. Global economic recovery and growth remained slow and uneven, impeded by ongoing geopolitical tensions, amid rising cost-of-living amongst other factors. The Group’s businesses had also been significantly affected by seasonal or cyclical factors during the financial period, resulting in a decline in our financial performance in FY2023.
For the financial year under review, our revenue decreased by approximately 27.6% or RMB 1,282.1 million from RMB 4,644.7 million in FY2022 to RMB 3,362.6 million in FY2023. The decrease in revenue was attributable mainly to the drop in liquefied petroleum gas (“LPG”) price from RMB 5,199 per ton in FY2022 to RMB 4,423 per ton in FY2023; coupled with a reduction of sales volume of LPG from 897,543 tons in FY2022 to 761,285 tons in FY2023.
In tandem with the Group’s decline in revenue, gross profit decreased by 24.6% or RMB 45.5 million from RMB 185.0 million in FY2022 to RMB 139.5 million in FY2023 as a result of the decrease in demand as well as price fall. The price fluctuation, however, also impacted on our cost of sales, which in turn led to an improvement in our gross profit margin from 3.98% in FY2022 to 4.15% in FY2023. After deducting for costs and taxes, the Group yielded a net profit of RMB 18.8 million in FY2023, compared with the net profit of 48.5 million in FY2022.
In the latest International Monetary Fund’s World Economic Outlook, China’s GDP growth year-onyear is projected at 4.6% in 2024, representing an upward revision of 0.4% from its prior outlook in October 2023. With China’s Five-Year Plan supporting the goals of carbon peaking by 2030 and carbon neutrality by 2060, the PRC government remains highly focused on driving the country towards a green low-carbon economy. Given this, demand for green energy is anticipated to remain strong in China going forward, backed by the consistent support from government energy policies.
We believe LPG is well placed to compete as an attractive clean energy in the Chinese energy market. Augmenting efficiency in our supply chain would be imperative for the Group to be a part of and greater contribute towards China’s sustainability solutions and efforts. To this end, our management will continue to upgrade our infrastructure and invest in clean energy technologies to enhance our competitive edge and better cater to the needs of our customers. We leverage on our strong and well-established sales network and ties with our customers and suppliers while seeking to diversify our customer network to more industries and regions.
Meanwhile, in view of diversification and expansion of the Group’s income source, We have also entered into the solar power generation market during the financial year and would continuously and proactively increase our participation in the green energy market.
Externally, in the macroeconomic scene, continued geopolitical tensions have caused significant uncertainty on global economy thereby resulting in unprecedented disruptions on the energy supply chain. Oil and gas prices have also seen substantial price fluctuations. Notwithstanding the uncertainties remaining in the international energy market, Ouhua has been putting in the work to capitalise and turn crisis into opportunities. We will continue to tap on our expertise and experience on LPG trading and excellent infrastructure and facilities to preserve our long-term success.
On behalf of the Board and management, I would like to express my heartfelt appreciation to our valued shareholders, staff, customers, business partners and all other stakeholders for their unwavering and continuous support and confidence. Ouhua is committed to achieving growth in a sustainable manner, and I am confident that with the continuous support and operational strategies, we will tide over the challenges and get back on track to recovery soon.