RLX Technology Reports Decrease in Net Income for Q2 2022

RLX Technology has reported a net income of 2.23 billion yuan (approximately 333.5 million USD) for the second quarter of their 2022 fiscal year. This is a decrease from the net income of 2.54 billion yuan reported in the same period in 2021. The gross profit for the second quarter of 2022 was 0.9779 billion yuan, a decline from the 1.15 billion yuan reported in the same period the year before.

Photo: RLX

The company attributes the decrease in net income primarily to a pause in store expansion and new product releases in order to comply with domestic regulatory requirements.

Recently, the steam industry in China has been transferred to the regulatory framework for tobacco products. Electronic cigarette manufacturers now need to obtain an operating license from the State Tobacco Monopoly Administration (STMA), while steam products must meet various standards and technical requirements before entering the market.

On June 10, 2022, a subsidiary of RLX Technology was granted an STMA license to produce e-cigarette oil. On July 22, 2022, another subsidiary was approved to own the RELX brand and produce electronic vapor charging devices, cartridge products, and products sold in combination with electronic vapor charging devices and cartridge products under the RELX brand.

In the past few months, we have made significant progress in adapting our business and product development to the new regulatory framework," said Ying (Kate) Wang, co-founder, chairman, and CEO of RLX Technology, in a statement. "Specifically, we have obtained a manufacturing license and received regulatory approval for some new products, demonstrating our outstanding operations and industry-leading R&D capabilities.

RLX Technology's CFO, Lu Chao, has announced that the sales of new products in the company's newly regulated trading system, which meet national standards, have been slow due to changes in regulation. Despite facing macro headwinds, the company plans to continue focusing on cost optimization while enhancing product competitiveness under the new regulatory regime to create sustainable long-term growth for its shareholders.

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