Volcano Spring International Holdings Limited provided consolidated earnings guidance for the year ended 31 December 2023. For the period, the company expects to record a net loss after tax of approximately RMB 39.0 million, as compared with a net loss after tax of approximately RMB 43.6 million for the corresponding period in 2022. During the year ended 31 December 2023, consumer confidence in China is yet to recover fully as the global economic situation remains highly uncertain.

Interest rates remain at a high level, which increases the Group's cost of funding. The weak consumer confidence and the high interest rates adversely affect the financial performance of the Group. The expected net loss for the year ended 31 December 2023 is attributed to the decrease in gross profit margin to approximately 29.0% in 2023 from approximately 43.6% in 2022 resulting from a drop in sales, a change in product mix, an increase in impairment loss on trade receivables and inventories and an increase in finance costs resulting from increased borrowings to finance the Group's business operations and the rise in interest rates.