ESG Inc. Reports Q2 2025 Revenue Decline but Improved Profit Margins

ESG Inc. reported its financial results for the second quarter of 2025, revealing a revenue of $2.49 million, a slight decrease of 0.8% from $2.51 million in the same period last year. For the first half of 2025, total revenues reached $4.08 million, down 16.6% from $4.89 million in the first half of 2024. The decline in revenue was attributed to reduced production of Compost III and fresh mushrooms as the company focused on building an additional environmental protection facility. Despite the revenue drop, ESG Inc. achieved a gross profit of $1.08 million for the quarter, significantly up from $432,187 a year earlier, reflecting an improved gross margin of 43.5% compared to 17.2% in the prior year.

The company's cost of goods sold (COGS) also saw a notable decrease, falling by 32.2% to $1.41 million for the second quarter, down from $2.08 million in 2024. This reduction in COGS contributed to a substantial increase in operating income, which reached $806,379, compared to $155,901 in the same quarter of the previous year. ESG's net income for the quarter was $517,554, a significant improvement from $81,347 in the prior year, while the net income for the first half of 2025 was $304,890, compared to a loss of $506,320 in the same period of 2024.

Operationally, ESG Inc. has been focusing on strategic developments, including the acquisition of a 74.52% equity interest in Funan Allied United Farmer Products Co., Ltd. in September 2023. This acquisition is expected to enhance the company's production capabilities in China. The company also reported a temporary scale-down of production at its facilities to facilitate the installation of new equipment and comply with environmental regulations, which is anticipated to improve operational efficiency in the long run.

As of June 30, 2025, ESG Inc. had a working capital deficiency of $5.76 million, primarily due to short-term bank loans totaling $6.00 million. The company is actively seeking to address its liquidity challenges through a combination of equity offerings, debt financing, and collaboration agreements. The total assets of the company stood at $29.30 million, with total liabilities of $14.49 million, resulting in total equity of $14.80 million. The company’s employee headcount remained stable, and it continues to focus on expanding its market presence, particularly in the mushroom and composting sectors.

Looking ahead, ESG Inc. remains cautious about its financial outlook, given the ongoing challenges in the market and the need for additional financing to support its operations. The management has expressed optimism about the potential benefits of its strategic initiatives, including the expansion of its product lines and improvements in operational efficiency. However, the company acknowledges the uncertainties surrounding market conditions and regulatory compliance that could impact its future performance.