The rising cost of waste paper procurement burdened Rongsheng Environmental's net profit declined by 21.86% last year

On the evening of March 31, Rongsheng Environmental Protection (603165) disclosed its 2025 annual report. Last year, the company achieved operating revenue of 2.25B yuan, a year-on-year increase of 0.81%; net profit attributable to the parent was 224 million yuan, a decrease of 21.86% year-on-year; net profit after deducting non-recurring gains and losses was 122 million yuan, down 48.39% year-on-year; it plans to distribute a cash dividend of 11 yuan (tax included) for every 10 shares.

Rongsheng Environmental Protection mainly engages in the papermaking industry, with core products including kraft linerboard, high-strength corrugated base paper, and corrugated cardboard. In 2025, affected by fluctuations in upstream raw material prices, the company’s main raw material, waste paper, procurement costs increased year-on-year, while the market selling prices of downstream raw paper products saw limited support, leading to a narrowing of the “raw paper-waste paper” price spread, compressing product profit margins and causing a decline in gross profit margin of the main business.

Last year, the significant decline in Rongsheng Environmental Protection’s net profit after deducting non-recurring gains and losses was mainly due to the fact that most of the financial products purchased in the previous period were bank deposits, with interest income included in operating income, while this period’s main financial products were fund trust and other brokerage financial products, with earnings included in non-recurring gains and losses, due to different accounting standards. If these effects are restored, the simulated net profit after deducting non-recurring gains and losses for this period would decrease by 71.4135 million yuan compared to the previous period, a decline of 25.7%.

During the reporting period, Rongsheng Environmental Protection steadily promoted the construction of the headquarters economic project, while solidly advancing the construction of fundraising projects, enhancing the company’s competitive advantage and profitability. Meanwhile, the company regards digital and intelligent transformation as a key driver of high-quality development, relying on technological innovation to optimize production processes, promote automation and intelligent transformation of production links, and build efficient, precise, and controllable digital factories to improve operational efficiency.

Data shows that in 2025, Rongsheng Environmental Protection produced 816.1k tons of raw paper, a year-on-year increase of 2.23%; sold 814.3k tons of raw paper, up 1.78%, with inventory at 10.7k tons, an increase of 17.19%.

In terms of product revenue, Rongsheng Environmental Protection’s raw paper achieved revenue of 1.82 billion yuan, a year-on-year increase of 1.4%; the gross profit margin for this product was 11.73%, a decrease of 1.72 percentage points compared to the previous year; sales of paperboard and cartons reached 342 million yuan, up 0.51% year-on-year; the gross profit margin for this product was 7.93%, down 2.41 percentage points from the previous year.

From an industry perspective, in recent years, leading papermaking companies have continuously expanded their market share through technological R&D advantages, resource integration capabilities, and brand influence, while small and medium-sized enterprises face more severe survival pressures. Some companies have been gradually eliminated from the market due to outdated technology, environmental non-compliance, or insufficient cost control. Mergers and acquisitions within the industry will become more frequent, with high-quality capacity further concentrated among leading companies, and the market competition pattern evolving from dispersion to oligopoly.

According to the business plan, in 2026, Rongsheng Environmental Protection will fully leverage the new headquarters economic platform, strengthening the endogenous motivation and radiating capacity of its papermaking base. Based on the existing industrial foundation, in-depth analysis of market demand evolution trends, and forward-looking exploration of potential projects with growth potential, the company will continue to expand the breadth and depth of its industrial layout. By promoting product diversification and differentiation, accelerating the formation of a high value-added, highly competitive industrial system, and cultivating emerging growth poles for long-term corporate development.