Major Product Prices Plunge! Fertilizer "Bull Stock" Lu Tian Chemical's 2025 Non-GAAP Loss Expands 99.36% YoY, Company: All Staff Participated in Cost Reduction and Efficiency Improvement

Lutianhua (SZ000912, stock price 6.02 RMB, market value 9.439 billion RMB) released its 2025 annual report on the evening of March 15. In 2025, the company achieved operating revenue of approximately 4.495 billion RMB, a year-on-year decrease of 11.34%; net profit attributable to the parent of about 31.78 million RMB, up 50.23% year-on-year; net profit after deducting non-recurring gains and losses of approximately -38.43 million RMB, a 99.36% increase in loss; basic earnings per share of 0.02 RMB, a 100% increase.

Image source: Lutianhua 2025 Annual Report

Despite the company’s net profit attributable to the parent increasing by over 50%, the annual report shows that the net cash flow from operating activities during the reporting period was about 232 million RMB, a decrease of 31.83% year-on-year. The company states that the main reason is the decline in prices of major commodities, leading to reduced cash collection.

The annual report indicates that Lutianhua adopted a “tight budget” mindset during the reporting period, with all staff participating in cost reduction and efficiency improvement.

Image source: Lutianhua 2025 Annual Report

Specifically, the company significantly reduced various operating expenses. Selling expenses decreased by 20.92% year-on-year, management expenses by 15.66%, and financial expenses by 26.40%. The reduction in selling expenses was attributed to decreases in employee compensation and promotional costs.

Image source: Lutianhua 2025 Annual Report

Strict cost control was the main reason Lutianhua was able to see net profit growth despite declining revenue during the reporting period.

While consolidating core domestic channels, the company actively expanded into international markets through the Western Land-Sea New Passage, successfully exporting 134,000 tons of urea throughout the year. R&D investment for the year reached 1.14 billion RMB, up 9.39%. A total of 95 technological innovation projects were launched, 10 technologies successfully transferred, and the company was again certified as a “National High-Tech Enterprise.”

The company applied for 26 patents and was granted 17, accumulating a total of 87 valid patents. In addition to core patents, Lutianhua actively participated in drafting national standards such as “Industrial Methanol,” “Glycerol Testing Methods,” and “Low-Carbon Operation Management Norms for Chemical Parks,” demonstrating technological strength and reinforcing its role as an industry standard-setter.

Although Lutianhua achieved positive net profit growth in 2025, the “Daily Economic News” (hereinafter “Daily Econ News”) reporter noted that revenues from its two main businesses declined: the fertilizer industry saw an 8.54% decrease, and the chemical industry experienced a 20.73% drop, indicating significant pressure on core business volume.

The annual report also shows that influenced by macroeconomic and market conditions, prices of main products such as urea, compound fertilizers, and methanol fell sharply during the reporting period; meanwhile, raw material prices like natural gas remained high, creating a price inversion with product prices, significantly increasing cost pressures and severely narrowing profit margins in main businesses.

Regarding capacity utilization, although overall stable, the utilization rates of specific products were not fully released. The report states that Lutianhua’s methanol capacity is 700,000 tons, with a utilization rate of only 36.1%; diesel vehicle exhaust treatment liquids have a capacity of 100,000 tons, with an even lower utilization rate of 19.4%; the capacity utilization rate for compound fertilizers is 67.08%. Excess low-efficiency capacity has resulted in heavy depreciation and maintenance costs.

Image source: Lutianhua 2025 Annual Report

In detailed business segments, Lutianhua’s chemical sales volume decreased by 20.96% year-on-year, with production volume down 21.09%. Notably, although fertilizer sales increased slightly by 0.81%, fertilizer inventory reached 107,100 tons, a surge of 32.06% year-on-year, reflecting high inventory pressure amid weak demand.

Image source: Lutianhua 2025 Annual Report

Additionally, the company faces certain liquidity risks. The annual report discloses overdue accounts payable notes of 80 million RMB due to lawsuits, and approximately 130 million RMB in bank deposits are restricted due to judicial freezes.

The Daily Econ News reporter observed that, amid intensified global fertilizer supply disruptions, the recent release of spring farming demand, and rising raw material costs, many A-share fertilizer stocks, including Lutianhua, have recently surged.

Data shows that from early 2026 to March 13, Lutianhua’s stock price increased by 45.06% over 44 trading days, while the fertilizer sector’s overall change was 24.36%.

In the secondary market, Lutianhua closed again on March 13 with a 7.5% increase, at 6.02 RMB, with a total trading volume of 1.35 billion RMB, reaching “huge” turnover with a 14.29% turnover rate.

Cover image source: Sina Finance Media Library