China-based LED company MLS recently announced the company had met its 2014 revenue target of RMB 4 billion, or 39.25% growth compared to the same period in 2013.

The company’s net profit showed an incremental increase of 0.25% to RMB 434 million.

To make the most out of potential market opportunities, the company has started steadily releasing Surface-Mount Device (SMD) LED production capacity. The company has been strengthening LED marketing and promotions to significantly raise profit revenue.

Net profits have not grown simultaneously mainly because company expenditures eroded profits. The company had continued to scale up LED lighting expansion in 2014, raised LED lighting and sales personnel salary, invested in advertisements and significantly enlarged exhibition expenses. Market competition has been more intense in the luminaire market, due to its lower entry level.As a new entrant in the luminaire market, MLS needs to improve its manufacturing technology, since mass production has yet to be realized.

High labor and manufacturing costs have kept the company’s luminaire gross profits fairly low, and dragged down the company’s consolidated gross margin. In addition, escalating market competition in the SMD market has driven down retail prices and gross margin, which chipped away the company’s profitability this quarter.

According to the company, its net profits were driven up since market demands have been consistently growing in the emerging LED market. The company has also followed in the footsteps of leading international manufacturers by introducing fully automated manufacturing equipment into its production lines. As MLS raises production capacity and volume for its featured products, manufacturing cost advantages can be achieved through mass production, which in turn would raise the company’s LED package products market competitiveness.

(Author: LEDinside China editorial team)