Kingold Jewelry sales plunge

Kingold Jewelry has announced a 26.6 per cent fall in sales in the second quarter to June 30.
The specialist manufacturer and designer of 24-karat gold jewellery, ornaments and investment-oriented products said the sales drop reflected decreased production, reduced sales volume and lower selling prices.
The company processed 14.5 metric tons of 24-karat gold products in the quarter, compared to 17.9 metric tons the previous year. Lower gold prices forced it to write down $7.3 million in the value of its inventory.
Gross profit fell from $24.5 million to $2.4 million and gross margin was one per cent compared to 7.2 per cent, primarily due to the write-down of inventory as the result of the drop of gold prices in 2015. Net income was just $600,000.
Nevertheless, Zhihong Jia, chairman and CEO, said the company was pleased to maintain profitability during the second quarter given the sharp drop of gold prices and the succeeding lower demand for gold products.
“China’s economy has been cooling off since the beginning of 2015, and the red-hot stock market during the first half of 2015 made the demand for gold much less appealing. Thus, Chinese consumers have slowed their demand for gold substantially. However, we believe market conditions will motivate us to enhance our design capabilities to solidify our position as one of our industry’s leaders, to establish new partner banks to further extend our coverage for our investment gold products, and to seek and explore new opportunities to expand our sales channels.”

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