Yips Chemical Holdings Ltd. made a profit of 1.68 million Hong Kong dollars (U.S. $216,000) in 2016 after suffering a HK $26 million loss the year before. Sales revenue was down, but the group said operational improvements led to better gross profit margins.
The Hong Kong-based supplier, which also makes inks, coatings and solvents, said in its annual report last week that its lubricants division recorded a profit after two years of large losses that had been largely attributed to renminbi depreciation. The turnaround in profit was due to active and effective measures adopted by the management to combat the persistent drop in the RMB exchange rate, the firm said in the report.
Turnover decreased by 6 percent to HK $328 million, but gross profit margins improved markedly year on year as the group strived to drive segment focus and lower structural costs, pinpointing each link in the value chain – including sales procedures, raw material procurement, production and logistics.
The management teams hard work at venturing into the higher-tier automobile engine oil segment started to bring results, the report continued. [Management] will take advantage of this trend to reposition product mix, strengthen distributor network and facelift the brand of Hercules lubricants, with an objective to continue to enhance the profitability in targeted market segments.
The Hercules-branded range of automotive and industrial products includes engine oils, antifreezes, coolants, brake fluids, turbine oils, heat conducting oils, rail oils, circulating oils and more. Applications for the firm’s other brand, Pacoil, include metal processing, textile, foundry, toys, paper making and electronics, among others.
Yip’s raised prices of its Herclues lubricants by 5 percent early this month.
Late last year, the group purchased a HK $130 million office in Wanchai, and will relocate there from its headquarters in Fanling in the second quarter.