Amid a sustained rise in gold prices, China National Gold Group Gold Jewellery Co., Ltd. reported declining performance in its third-quarter results, reflecting the profound challenges faced by gold retailers in the current market environment.
For the first three quarters of 2025, the company recorded total revenue of 45.764 billion yuan, down 1.74% year-on-year, while net profit attributable to shareholders fell 55.08% to 335 million yuan. Notably, net profit in the third quarter alone plunged 88.86% compared to the same period last year.
Despite the continuous upward trend in international gold prices this year, domestic gold consumption has remained sluggish, contrary to price movements. China National Gold’s latest quarterly report reveals that while revenue showed growth, profitability deteriorated significantly. This "revenue growth without profit growth" phenomenon highlights the operational difficulties gold jewelry companies face in a high-price environment.
China National Gold is not alone in confronting these market shifts. Recent earnings reports from multiple listed gold jewelry companies indicate similar trends, underscoring systemic pressures across the industry amid soaring gold prices.
**Sharp Decline in Profitability** The core challenge for China National Gold in Q3 was a marked weakening in profitability. Despite revenue growth, net profit saw a steep decline—a divergence that exposes the profit squeeze on gold retailers in a high-price environment.
One major factor behind this trend is the financial strain from gold leasing operations. As gold prices surged rapidly, discrepancies in accounting methods between inventory holdings and financial liabilities created asynchronous impacts on the income statement, significantly eroding quarterly profits.
Meanwhile, operating cash flow also showed signs of pressure. Slower sales collections and increased inventory levels jointly affected cash conversion efficiency, adding operational challenges.
From an industry perspective, high gold prices have clearly dampened consumer demand. Faced with persistently rising prices, buyers have adopted a wait-and-see approach, reducing purchase intent and putting pressure on retail sales—ultimately hurting overall profitability.
**New Challenges from Industry Shifts** Beyond internal operational pressures, China National Gold is grappling with multiple challenges from policy and market changes. Recent tax reforms on gold have further intensified the strain on retailers.
The new tax policy imposes differentiated tax treatments on investment and non-investment gold. For jewelry manufacturers purchasing gold from exchanges, the deductible input tax ratio has decreased, directly raising tax burdens.
Analysts note that this policy shift may increase costs for gold retailers. In an already competitive market, it remains uncertain whether companies can fully pass these costs onto consumers through price hikes.
Additionally, shifts in consumption patterns are reshaping the industry. With the new tax policy, consumers now prefer compliant channels for purchasing investment-grade gold bars or gold ETFs, potentially squeezing the market share of traditional jewelry retailers.
In response, China National Gold and peers are actively restructuring operations, enhancing product innovation, and optimizing sales channels to navigate the increasingly complex market. However, the effectiveness of these transformations remains to be seen, and short-term pressures persist.
**Conclusion** China National Gold’s Q3 report illustrates that soaring gold prices bring not just potential inventory gains but also multifaceted operational challenges—from profit declines and cash flow strains to tax policy adjustments and consumption shifts.
In the current environment, balancing gold price volatility with end-demand, managing cost pressures from regulatory changes, and refining product and channel strategies have become urgent priorities for gold jewelry firms like China National Gold.
*This content is AI-generated and for reference only. Please verify details independently.*
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