Farsoon reports -19% revenues and -48% profit in FY 2024

Hunan Farsoon High-Tech Co., Ltd. (Farsoon Technologies) has released its preliminary financial report for 2024, revealing a challenging year marked by a significant decline in revenues and profitability. Farsoon’s total operating income fell by 18.82% compared to the previous year, while net profit dropped by 48.83%. Increased research and development (R&D) expenses and fluctuating demand in downstream application industries contributed to these financial setbacks.

The company seems to be facing challenges similar to those faced by larger Western companies such as Stratasys and 3D Systems, which have reached a plateau beyond which they seem unable to grow. Meanwhile, newer and smaller companies progressively erode their market share. This now appears to be happening in China, with rapidly rising players such as Kings3D, Sooner and other lesser-known companies taking market share away from first movers such as Farsoon, and making market conditions more challenging.

Farsoon reported a total operating income of RMB 491.97 million (USD 68 million), down from RMB 606.04 million (USD 84 million) in 2023. Operating profit saw an even steeper drop, plummeting by 57.32% to RMB 58.79 million. Total profit also decreased by 53.74% to RMB 66.39 million. The net profit attributable to the parent company fell to RMB 67.12 million, down from RMB 131.16 million in the previous year, representing a 48.83% decline. After deducting extraordinary gains and losses, net profit stood at RMB 54.79 million, down 53.61% year-on-year.

Basic earnings per share (EPS) for 2024 stood at RMB 0.16, reflecting a 51.52% drop from RMB 0.33 in 2023. The company’s weighted average return on equity (ROE) also declined, decreasing by 5.17 percentage points to 3.47%. Despite declining profits, Farsoon’s total assets increased by 7.72% year-on-year, reaching RMB 2.5 billion. Owners’ equity attributable to the parent company also saw a marginal increase of 0.76%, bringing it to RMB 1.94 billion. Although the company’s stock value has decreased slightly, it remains close to its all-time high.

A key factor behind Farsoon’s revenue decline in 2024 was the fluctuation in demand across various downstream application industries. Market cycles led to inconsistent purchasing patterns, impacting overall sales performance. Additionally, extended payment periods delayed revenue recognition for some orders, further suppressing reported income.

Farsoon continued to expand its R&D investments in 2024, increasing spending compared to the previous year. While essential for long-term technological advancement, this higher expenditure contributed to a decline in net profit, as operating costs escalated without immediate revenue growth to offset the impact. Operating profit dropped by 57.32% due to lower revenues and rising costs. The company’s increased investment in R&D and other operational expenses outpaced its ability to generate additional income.

The total profit fell by 53.74% to RMB 66.39 million, primarily due to reduced sales revenue and growing operational costs. Similarly, the net profit attributable to the parent company declined by 48.83% to RMB 67.12 million. The significant decline in EPS (-51.52%) and ROE (-5.17 percentage points) was largely driven by the static share capital alongside reduced profitability. Despite asset growth, the company’s returns on equity weakened due to declining net income.