Lubricant marketer China Rerun Chemical reported that gross profits for the 12 months ended Aug. 31 increased 22 percent compared to the previous year. Revenues and sales volumes rose by 21 percent and 15 percent, respectively - improvements that the company attributed to a restructured distribution network and higher quality products.
The year-in results posted Friday, were China Reruns first since October, when it listed on AIM, a subsection of the London Stock Exchange for small but growing international companies. The 20-year-old company, which is based in Daqing, China, called its performance encouraging.
The market is growing and changing rapidly, and with our robust financial base and our high quality branded products, we are strongly positioned to take advantage of commercial opportunities and grow our market share.
China Rerun recorded sales revenues of RMB 273.29 million (U.S. $45.1 million) for the 12 months ended Aug. 31, compared to RMB 226.13 million for the previous 12 months. Gross profits rose from RMB 59.8 million to RMB 72.8 million, and sales volumes climbed 15 percent to 14.5 million liters.
The company said it has raised the quality of automotive and industrial lubricants that it sells, and that this allowed it to put through price increases that averaged 5 percent, off-setting raw material cost increases. It also eliminated lower-volume distributors, saying it wants in the future to focus on high-quality companies that can achieve higher volumes. As a result, average revenue per distributor rose 36 percent to RMB 7.6 million. The company added four new distributors since the end of the fiscal year and now has 40 in 13 provinces and municipalities.
China Rerun said it also cut costs by reducing commissions for sales staff from 5 percent to 1.5 percent.