RELX and Smoore: What Does It Feel Like to Have RMB 10 Billion in Cash?

Both companies 'halved': RELX and Smoore's financial reports reveal the e-cigarette industry's trends

Recently, leading brands and OEM giants in the e-cigarette industry have released their financial performance reports for the second quarter of 2023, showcasing dynamic changes within the industry. For example, Fogcore Technology and Smoore's financial data reveal a downward trend in revenue and profits, reflecting the transformation challenges and new development opportunities facing the e-cigarette industry, with initial signs of industry transformation pains and regulated development.

Fogcore Q2 revenue of 380 million, down 83% year-on-year

Fogcore Technology's unaudited financial report for the second quarter of 2023 shows a net income of 378.1 million RMB (approximately 52.1 million USD), a decrease of 83% compared to the same period last year. According to GAAP, net profit was halved year-on-year, amounting to 204.7 million RMB (approximately 28.2 million USD), a decline of 54%. Meanwhile, the non-GAAP net profit was 86.2 million RMB (approximately 11.9 million USD), with a staggering decline of 86%. Additionally, Fogcore Technology's gross profit was 98.5 million RMB (approximately 13.6 million USD), with a gross margin dropping from 43.8% last year to 26.1%. This decline is primarily attributed to the 36% consumption tax policy implemented on November 1, 2022. Despite experiencing market fluctuations, Fogcore Technology remains financially strong, with cash reserves exceeding 15 billion RMB.

Smoore's financial report for the first half of 2023 shows a similar trend, with revenue of 5.123 billion RMB, down 9.4% year-on-year. Gross profit was 18.55 billion RMB, a decrease of 31.4%. Although R&D expenses saw a slight increase, profits dropped by 48.2%. Adjusted profits and profit margins also exhibited negative growth trends, decreasing by 47.2% and 10.6 percentage points, respectively.

From the financial data, it is evident that the e-cigarette industry is undergoing a transformation period, with changes in the market environment presenting new challenges. On one hand, the domestic market is impacted by illegal e-cigarettes and the restoration of national standards, which has affected brands like RELX; on the other hand, the slowdown in growth in international markets, such as Europe, has impacted the performance of some companies, including Smoore. In the U.S. market, the competitive landscape is also changing, with increased competition among small and medium brands, leading to a decline in market share for brands like Vuse and JUUL.

Market share of Vuse and JUUL in the U.S. e-cigarette market

According to Nielsen, as of June 17, 2023, over the past four weeks

However, the financial reports also reveal new development opportunities. As the industry gradually standardizes, new national standards provide direction for healthy industry development. During this transformation period, companies have the opportunity to adapt to market changes through innovation and improved product quality, seeking new growth points.

Industry insiders believe that the financial performance of leading companies reflects that the e-cigarette industry is in a difficult transformation period, but the gradual establishment of the new national standard system still holds promise for long-term development. The process of industry standardization is irreversible, and entering a new phase of steady improvement is an inevitable trend.

Related data sources:

Financial Tiger: RELX's parent company Fogcore Technology's Q2 net profit of 200 million down 54% year-on-year: market illegal products caused its revenue to drop 83%

Leidi Network: RELX's parent company Fogcore's quarterly report illustrated: revenue of 380 million down 83% year-on-year, net profit of 200 million