Copton Tech, a lubricant manufacturer based in Qingdao, Shangdong province, faced significant financial challenges in the fourth quarter and throughout the full year. The company reported a drastic decline in net profit, which plunged by 92% in Q4 and fell by 63% for the entire year. Similarly, operating income experienced a decline of 20% in Q4 and slipped by 29% for the year.
The fourth-quarter financial report revealed a concerning trend in revenue as well. Lubricant sales revenue suffered a substantial decrease of over 63% during this period, indicating a struggling market for Copton. However, there was a slight uptick in industrial sales revenue, suggesting some positive developments in that segment.
Copton’s net profit in Q4 was ¥819,797 (equivalent to U.S. $118,600), a significant decline from ¥10.2 million during the same period in 2021. The operating income for the quarter also decreased to ¥199.2 million, compared to ¥248.2 million in the previous year.
For the full year, Copton’s net profit was ¥39.6 million, showing a substantial decrease from ¥105.7 million in 2021. The operating income in 2022 declined from ¥1.1 billion to ¥791.6 million, highlighting the challenging business conditions faced by the company throughout the year.
The company’s operating data for the fourth quarter provided further insights. Automotive and industrial lubricant sales combined accounted for 49% of the company’s ¥202.1 million in sales during this period, while antifreeze and exhaust gas treatment products contributed to the remaining revenue.
Notably, automotive lubricant sales experienced a significant decline of 63%, totaling ¥75.3 million in Q4, compared to ¥201.9 million in the same period in 2021. Sales volume and production volume for automotive lubricants also witnessed substantial drops of 70% and 73% respectively, reflecting a challenging market demand.
In contrast, industrial lubricant sales showed a modest increase of 6% to ¥24.1 million, while sales volume declined by 7% and production volume fell by 28% compared to the previous year.
Overall, Copton Tech’s financial performance in the fourth quarter and throughout the year raises concerns about its profitability and market position. The company may need to reassess its strategies, address the decline in net profit and operating income, and explore opportunities to improve sales and production in the challenging lubricant market.