A Study On The Impact Of "Reducing Excess Capacity" On The Profitability Of Xingfa Chemicals Group

Since 2015,in the process of Supply-side Structural Reform,high production capacity is the main problem of the chemical industry,along with industrial structural problems.On the one hand,the deepening of the reform will make the competition among enterprises in the industry more fierce,on the other hand,it will also increase the concentration of the chemical industry.The elimination of backward production capacity is conducive to the improvement of industrial capacity utilization,optimization of resource allocation and improvement of industrial profitability.Firstly,this paper combines the practical measures of "reducing excess capacity" of XINGFA CHEMICALS GROUP,and then takes domestic and Reducing Excess Capacity,Profitability Analysis and Du Pont Analysis system as the theoretical basis.Secondly,it analyzes the changes of specific financial indicators of Xingfa Chemicals Group in the five years from 2014 to 2018,and finally draws a conclusion.Through the research,it is found that the "reducing excess capacity" measures taken by Xingfa Chemicals Group in the supply-side reform environment have indeed reduced the enterprise’s capacity on the whole.Moreover,the reduction of production capacity leads to the recovery of chemical product prices and the reduction of costs,which leads to the improvement of enterprise profitability.Therefore,the following conclusions are drawn: as far as the current situation is concerned,Xingfa Chemicals Group has made great efforts in the aspect of "reducing excess capacity",which has a positive impact on the development of the enterprise,including profit recovery and optimization of industrial structure.As a result,the profitability of Xingfa Chemicals Group gradually improved in 2016 when the reform was formally implemented and in2018 when it was later implemented.Thus,it can be concluded that other enterprises in the chemical industry can improve the current industrial problems and achieve better and more stable development by "reducing excess capacity" and taking corresponding active measures.