In order to sum up experience, find deficiencies, better carry out various work in the second half of the year, and then strive to achieve the annual objectives, Ningbo Horizon Magnetics held a work summary meeting for the first half of 2021 on the morning of August 19. During the meeting, managers of departments reported the completion of work in the first half of 2021 and comprehensively analyzed the problems existing in the work. The meeting focused on the company's financial data in the first half of the year and analyzed magnetic product sales in detail.
In the first half of 2021, the company's magnet product sales increased by 48% year-on-year, and the product gross profit decreased instead of increasing, with a year-on-year decrease of 26%. Magnet sales increased significantly year-on-year, mainly for the following three reasons:
1. Thanks to our deep cultivation layout and good clamping position, Ningbo Horizon Magnetics has focused on the R & D and production of high-performance NdFeB magnets and the application market of electric motors as the cornerstone of the company's development since its establishment. With the development of the strategy of "carbon to peak and carbon neutral", the continuous efforts of low carbon economy and intelligent manufacturing field, especially the lack of contact with COVID-19, has led to an increase in demand for production automation. We seize the development opportunity of the industry, expand the market and have obvious advantages in the servo motor and linear motor market especially.
2. The demand for magnetic components for personal consumption is growing rapidly. After ten years of development, the company's magnetic assemblies have accumulated rich theoretical and production experience, and have enough confidence and strength to enter customers' projects from the concept stage to meet customers' customized and personalized magnetic product needs. In addition to industrial magnet assemblies like shuttering magnet, magnetic filter bar, Ningbo Horizon Magnetics has accumulated many types of personal consumption magnetic products over the years, for example, powerful fishing magnet, colorful magnetic hook, Neodymium pin magnet, etc. Especially COVID-19 is seriously affecting the demand for industrial application magnets in manufacturing industry in Europe and the United States, and the demand for magnetic products for personal consumption at home keeps rising. Moreover during the epidemic, Amazon and other online shopping facilitate home people to buy Chinese products.
3. The prices of magnet raw materials, rare earths rose sharply compared with the same period of last year, and the prices of the rare earth magnet products also increased.
The main reason for the decline in product gross profit instead of increase is the sharp rise in rare earth prices. In the cost composition of magnets, expensive rare earth praseodymium neodymium and dysprosium iron materials account for the highest proportion. Generally, rare earth raw materials can account for more than 70% of the cost of Neodymium magnets. Although the prices of praseodymium, neodymium and dysprosium iron increased by 100% and 50% respectively, we helped long-term strategic customers share some of the cost of price rise, and price of the magnets supplied to them did not rise or rose by much lower than actual cost rise.
According to the sales of magnet products in the first half of the year, in the second half of the year, we will continue the advantages of the original high-performance Neodymium magnet, electric motor applications and personal consumption magnetic components. Moreover, we’ll expand the market of electronics such as sensors and loudspeakers, and customized industrial magnetic components. Provide customers with magnet products at competitive prices within our affordable cost.