Xinwang Foodstuffs, a maker of cooking oil, saw its stock down 3.4% today after the company released their 2021 financial information showing revenue was up by 10% but net profits dropped by 39%.
The company noted that rising prices of raw materials continue to squeeze their margins and the prices of their products have not risen enough to offset this.
This pattern is similar to Arowana, the market share leader in the cooking oil space in China, which reported 2021 numbers earlier this week.
The company’s revenue jumped by 16% in 2021, however net profit slumped 31%.
These disappointing numbers sent its share prices to a 17-month low of 45.10 yuan/share. This is down significantly from a high of 145.51 yuan/share in January 2021.
Soybean oil futures continue to move higher, with the Dalian September contract hitting a new high of 10,968 yuan/ton ($1,719/ton) today.
Companies in the edible oil sector will continue to face headwinds. Covid measures have weighed on consumer demand and spending as many cities hiked restrictions and closed restaurants.
Road logistics also remain disrupted, leading to spiking freight costs for many companies.
Given these factors, it seems unlikely companies will be able to pass on all of the rising costs to consumers.