The Operating Status of China's Printing Industry in January-February 2022

Time：2022-04-01 From：

From January to February 2022, enterprises above designated size in China's printing industry achieved operating income, a year-on-year increase of 6.3%. The total realized profit decreased by 11.2% year-on-year. After the epidemic has entered its third year, the printing industry's trend of increasing revenue and decreasing profits continues.

Recently, the National Bureau of Statistics disclosed the economic benefits of industrial enterprises from January to February 2022. From January to February, the national industrial production continued to rebound month by month since the fourth quarter of last year, and the growth rate of production in most industries accelerated, showing a positive trend.

It should be noted that in the statistical system of the National Bureau of Statistics, "printing and recording media reproduction industry" is one of the 41 major industries in all industries. There are about 6,000 regulated enterprises (with annual main business income of more than 20 million yuan) reporting their operations on a monthly basis. The total annual operating income of these enterprises is more than 700 billion yuan, accounting for more than half of the overall revenue of the national printing industry. 

1. Overall Trend

From January to February 2022, the industrial added value of all industries (enterprises above designated size) increased by 7.5% year-on-year, 3.2 percentage points faster than that in December 2021, and industrial production is steadily accelerating. Among the 41 major industries, 38 industries maintained a year-on-year increase in added value, and the growth rate of 33 industries rebounded from December last year.

As can be seen from Figure 1, the year-on-year growth rate of the printing industry from January to February was 6.2%, only 0.3 percentage points higher than the previous month, and lower than the average level of 7.5% for all industries. The growth of the printing industry was obviously hindered.

Figure 1 Year-on-year growth rate of GDP, added value of all industries and printing industries

2. Revenue and Profit

From January to February 2022, enterprises above designated size in the printing industry achieved operating income, a year-on-year increase of 6.3%. During the same period, all industrial enterprises above designated size achieved operating income, a year-on-year increase of 13.9%. The revenue growth rate of the printing industry has not reached the average level of the national industry.

From January to February 2022, the total profits of enterprises above designated size in the printing industry decreased by 11.2% year-on-year. During the same period, the total profits of all industrial enterprises above designated size increased by 5% year-on-year. Among the 41 major categories of industries, 22 have a year-on-year increase in total profit or a decrease in losses, 19 industries have declined, and the printing industry has unfortunately become one of the 19 declining industries.

It can be seen from Figure 2 that the operating income of the printing industry increased by 10.3% last year, and the total profit decreased by 0.4%. This year, the epidemic has entered its third year. The trend of revenue growth and profit decline in the printing industry has not been reversed, but has intensified. Printing companies are still generally faced with the dilemma of increasing cost pressure and increasing production without increasing revenue.

Observing the paper industry, which is closely related to the printing industry, from January to February, the operating income growth rate of the paper and paper products industry was 4.7%, and the total profit growth rate was -57.7%. Compared with the sharp rise in paper prices in the same period last year, this year's performance was obvious fallen back.

Figure 2 Year-on-year growth rate of cumulative operating income and total profit of the printing industry

3. Benefits 

In February 2022, the loss of enterprises above designated size in the printing industry was 29%, and the total loss of loss-making enterprises increased by 19.5%. Figure 3 shows the monthly loss since 2020. At the beginning of each year, the loss will be at a high level for the whole year, but this year's 29% loss is higher than last year's 26.7%, showing that since the beginning of the year, the printing industry still faces very servere business situation.

Figure 3 The loss percentage of the printing industry

From January to February 2022, the operating income profit margin of the printing industry was 3.91%, falling into the "3 range" for the first time. Figure 4 shows that compared with 5.76% for the whole year of last year, it decreased by 1.85 percentage points. Compared with the average level of 5.97% in all industries from January to February, there is also a considerable gap. The increase in raw material, electricity, labor, logistics costs and operating costs due to the impact of the epidemic has seriously eroded the profit space of printing companies.

From January to February 2022, the cost per 100 yuan of operating income of the printing industry is 84.81 yuan, which is higher than the average level of 83.91 yuan for all industries. This figure, compared with 83.94 yuan last year, also increased by nearly 1 yuan.

Figure 4 The cumulative operating income profit margin of the printing industry and the cost per 100 yuan of operating income

4. Asset Quality  

At the end of February 2022, the asset-liability ratio of enterprises above designated size in the printing industry was 46.31%. Compared with the debt ratio of 45.90% at the end of last year, it has increased slightly. Compared with the 56.3% asset-liability ratio of all industries at the end of February, the overall debt level of printing companies is lower.

At the end of February, the average recovery period of accounts receivable of enterprises above designated size in the printing industry was 65.1 days. Compared with 52.9 days at the end of last year, an increase of 12.2 days. In February, the average recovery period of all industrial accounts receivable was 58.3 days, an increase of 8.8 days compared with 49.5 days at the end of last year. It can be seen that the weak position of printing enterprises in the industrial chain has to bear more financial pressure.

At the end of February, the inventory turnover days of finished products of enterprises above designated size in the printing industry were 19.49 days, compared with 16.88 days at the end of last year, the inventory turnover rate slowed down.

5. Export Delivery Value

From January to February 2022, the export delivery value of the printing industry increased by 13.7% year-on-year. Since the beginning of this year, the world economy as a whole is still in the recovery stage, which has driven the growth of industrial exports. From January to February, the export delivery value of enterprises above designated size increased by 16.9% year-on-year. Although the export growth rate of the printing industry is lower than the average level of all industries, compared with the growth rate of 5.1% in the whole year of last year, it has a good start and hopes to maintain a high growth rate throughout the year.

Figure 5 Growth rate of export delivery value of printing industry

6. Price Index

With the help of the producer price index, the dynamics of market price changes in various industries can be observed.

Figure 6 shows price action since January 2020. The pulp price index (green line) and the paper price index (blue line) were in a period of shock and downturn after the periodical highs.

In contrast, the producer price index for the printing industry and the price index for bookbinding and printing-related services decreased slightly, and the overall trend was flat.

Figure 6 Producer price index of some industries (same month last year = 100)

7. Other Industry Trends

Table 1 shows the growth of the main business income of some of the 41 major industries that are closely related to the printing industry. Most of these industries are the customer industries served by the printing industry, and there are also upstream industries such as papermaking.

The table shows that the average growth rate of all industrial main business income from January to February 2022 is 13.9%, and the production growth trend is good.

Table 1 Growth rate of main business income in some industries

In terms of different industries, due to the growth in consumer demand during the Spring Festival, the consumer goods manufacturing industry has accelerated its recovery. Alcohol, beverage and refined tea manufacturing, tobacco products, and food manufacturing, including textiles and clothing, leather and footwear, and cultural, sports, and art industries, have experienced considerable growth. In the industrial product industry, chemical manufacturing, computer communications and other electronic equipment manufacturing maintained a relatively high growth rate; based on the easing of the "lack of cores" in automobiles in the early stage, the growth of the automobile manufacturing industry has improved.

Recently, there have been outbreaks of epidemics in many places in China, and the epidemic situation in some areas has tightened. In addition, the prices of raw materials are still high and fluctuating, and the pressure on enterprises to increase costs has increased. Printing enterprises still face many business risks and challenges, leaving the later development trend remaining to be observed.