Yihai Kerry Arawana Holdings Co.,Ltd. has staged a remarkable comeback.
On the evening of August 12, the "oil giant" delivered impressive results, with revenue reaching 115.682 billion yuan and net profit of 1.756 billion yuan in the first half of the year, representing a 60% year-over-year increase. For the first time in four years, the company has returned to a dual growth trajectory in both revenue and net profit.
Particularly in the second quarter, profitability showed significant recovery with profit growth of 261%.
"As China's largest condiment conglomerate, Yihai Kerry Arawana possesses brand influence, scale advantages, consumer loyalty, and the most comprehensive supply chain," said Zhu Danpeng, a Chinese food industry analyst. He believes that with the consumer sector flourishing, the company's comprehensive kitchen strategy encompassing multiple brands, categories, scenarios, channels, and consumer demographics will continue to yield dividends.
However, concerns remain regarding the company's relatively low profitability.
**Core Business Recovery**
Yihai Kerry Arawana has finally witnessed recovery.
Since 2020, the company's annual net profit has declined from a peak of 6 billion yuan, hitting a cyclical low of around 2.5 billion yuan last year, putting management under pressure.
"We expect all business segments to perform better this year than last year," company executives responded at the shareholders' meeting.
Indeed, both major business segments showed clear recovery.
In the first half, kitchen food revenue reached 71.551 billion yuan, up 2.69%, mainly benefiting from expanded sales channels and networks, as well as new factory capacity releases.
Meanwhile, driven by robust downstream aquaculture demand and channel advantages, feed ingredients and oil technology revenue grew 10.81% to 43.179 billion yuan.
Currently, raw material costs for soybeans, rice, wheat, and edible oils remain at low levels, significantly improving the company's gross margin to 6.53% in the first half, an increase of 1.63 percentage points.
According to a CICC research report, in the short term, soybean and other raw material prices will continue to fluctuate at low levels, with crushing profits expected to continue recovering.
Data shows that from January to mid-August, CBOT soybean average prices declined 11.4% year-over-year, while imported soybean crushing profits increased by 419.7 yuan per ton to 286.2 yuan per ton (previously negative), all benefiting Yihai Kerry Arawana's business.
Beyond impressive financial performance, operating cash flow also experienced explosive growth, surging from 1.636 billion yuan in the same period last year to 14.625 billion yuan, an approximately 8-fold increase.
As of August 15, Yihai Kerry Arawana's market capitalization stands above 170 billion yuan, showing signs of recovery. However, compared to its peak of 780 billion yuan, a significant gap remains.
**Concerns Emerge**
While the situation improves, Yihai Kerry Arawana has exposed some concerns.
On the evening of the interim report release, the company announced delays for two core fundraising projects - the "Yihai Kerry (Qingdao) Food Processing Project" and the "Oil Pressing, Refining and Supporting Engineering Construction Project" - extending completion to December 2027.
The reason cited was "prudent investment."
Company officials told reporters that both projects have not met planned progress, and they are prepared to implement the projects in phases while maintaining unchanged fundraising objectives.
Over the past 30 months, Yihai Kerry Arawana has issued six project delay announcements. As of June 2025, unused fundraising capital on its books reached 2.486 billion yuan.
The company also disclosed that 10 fundraising projects have not achieved expected returns, due to factors including insufficient demand, lower-than-expected sales volumes, and intensified competition.
Six projects, including the Yueqing Bay Port Yihai Kerry Grain and Oil Processing Port Comprehensive Project, have all fallen short of expected returns.
"Overall demand has been below expectations, while large wheat processing groups continue capacity expansion. The flour processing industry concentration is increasing, and industry competition has intensified," the company explained.
Furthermore, its image of "thin margins, high volume" and earning only "hard-earned money" has not been reversed.
The kitchen food industry faces intense competition, and grain and oil products suffer from serious homogenization. Yihai Kerry Arawana's gross margins are particularly low, hovering around 5%-6% for years.
Moreover, raw materials for its three major businesses experience significant volatility, including soybeans, palm and lauric acid oils, which are relatively unstable due to macroeconomic influences and may erode profits.
**Seeking Breakthrough**
Yihai Kerry Arawana has consistently sought to improve profit margins.
As early as 2018, management established "Fengchu (Shanghai) Catering" to enter the central kitchen business, promoting profit diversification through a model combining self-use production and external leasing.
As of June 2025, the company operates 83 production bases nationwide and continues building new facilities in multiple locations.
Yihai Kerry Arawana believes its multiple production bases near raw material sources, ports, railways, or terminal markets help reduce costs, ensure quality, and save logistics expenses.
"Building an industrialized one-stop ecosystem platform in the catering sector centered on grain and oil foods, constructing high competitive barriers and elevating profit margin levels," CICC commented.
The company also pursues high-end development, successively launching premium series including Hu Ji Hua Ancient Method Peanut Oil, Olivoila Olive Oil, fermented flour, and Grandma's Hometown Rapeseed Oil.
In September 2024, together with related party Hong Kong Jiayin, the company planned to inject relevant equity valued at 5.569 billion yuan into premium edible oil brand Luhua.
The latest cross-sector initiative involves entering the health sector.
In mid-April, Yihai Kerry Arawana launched the new brand "Golden Dragon Fish Fengyi Hall," focusing on functional health foods. The company has reportedly developed products including diacylglycerol oil (DAG), medium and long-chain fatty acid edible oil (MLCT), and low-GI rice and flour products.
"When expanding new businesses, we primarily consider their success potential, market capacity, and our own conditions."
Company executives stated in April that performance improvements for new projects cannot be achieved in just one or two years, as developing technical capabilities and improving product quality all require time.
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