KWUNGS AROMA (01925) issues a profit warning, expecting a mid-term net loss attributable to shareholders of approximately 20 million yuan, a shift from profit to loss compared to the same period last year.

KWUNGS AROMA (01925) announced that the Group expects to record a net loss attributable to the owners of the Company of approximately RMB 20 million for the six months ending June 30, 2026, compared to a net profit attributable to the owners of the Company of approximately RMB 23 million for the six months ended June 30, 2025. The Board of Directors believes that the deterioration in financial performance for the period is primarily due to an exchange loss of approximately RMB 27.4 million resulting from the depreciation of the US dollar against the RMB for the six months ending June 30, 2026. The Group holds a substantial proportion of its financial assets denominated in US dollars from overseas sales (mainly trade receivables and bank balances), and the depreciation of the US dollar during this period has resulted in a decline in the value of these financial assets. The depreciation of the US dollar against the RMB also led to a decrease in the RMB-equivalent selling price per unit of products, while the production costs remained stable as the majority of the Group's suppliers are local enterprises within China and transactions are settled in RMB, resulting in a decline in gross profit margin. In addition, the Group experienced a decrease in the fair value of its fund investments, leading to a fair value loss of approximately RMB 3.7 million for the six months ending June 30, 2026, compared to a fair value gain of approximately RMB 3.4 million for the six months ended June 30, 2025. Moreover, the government subsidies received by the Group amounted to approximately RMB 6.7 million for the six months ended June 30, 2025, and decreased to approximately RMB 2.9 million for the six months ending June 30, 2026, resulting in a reduction in profit for the Group for the six months ending June 30, 2026.