Net profit Rises 84.75% to RMB1,683.1 million
HONG KONG, April 7, 2008 /Xinhua-PRNewswire-FirstCall/ -- Sinopec Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or the "Company") (HKEx: 338; SSE: 600688; NYSE: SHI) announced today the audited operating results of the Company and its subsidiaries (the "Group") prepared under the International Financial Reporting Standards (the "IFRS") for the year ended December 31, 2007 (the "Year").
According to IFRS, turnover of the Group for 2007 amounted to RMB55,328.4 million, representing an increase of 9.35% as compared to 2006. Profit before tax was RMB2,151.4 million, an increase of 123.13% year-on-year. Profit after taxation of the Company was RMB1,683.1 million, an increase of 84.75% year-on-year. Earnings per share was RMB0.23 (2006: RMB0.12). The board of directors of the Company has recommended a final dividend of RMB0.09 (inclusive of tax) (2006: RMB0.04), equivalent to RMB9.00 per American Depositary Share.
Mr. Rong Guangdao, Chairman of Shanghai Petrochemical, said, "Driven by the relatively fast growth of the domestic economy and a cyclical peak of the continuing global petrochemical industry boom in 2007, the petrochemical industry in China was able to overcome negative impacts such as rising high international crude oil prices, reversed pricing trend of domestic petroleum products and fluctuations in the petrochemical product market, thereby attaining satisfactory results with continued rapid production, economic expansion and quality improvements. In 2007, the Group fully adopted a overall cost leadership strategy, maintained a stable improvement in production and operation, and effectively enhanced the upstream-downstream business chain structure. The economic efficiency witnessed a substantial improvement over the previous year."
In 2007, the Group's total net sales increased by 8.69% to RMB54,254.7 million for the Year, compared to RMB49,918.1 million in 2006. The weighted average prices (exclusive of tax) of synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products increased by 4.58%, 1.45%, 13.28% and 3.13%, respectively, as compared to 2006.
As to production and operation, the Group processed 8,938,400 tons of crude oil, generally on par with the previous year. Production outputs of gasoline, diesel and jet fuel increased by 5.78% over the previous year. The output of gasoline was 645,900 tons, down 15.19% from the previous year; the output of diesel was 2,929,100 tons and the output of jet fuel was 695,700 tons, increasing by 6.82% and 30.33%, respectively, year-on-year. Due to the overhaul of certain key facilities such as those related to ethylene, the Group produced 869,400 tons of ethylene and 455,900 tons of propylene, down 9.46% and 11.94% respectively from the previous year. The Group also produced 1,019,000 tons of plastic resins and polymers, representing a decrease of 6.32% over the previous year; 532,400 tons of synthetic fibre monomers, a decrease of 3.11%; 631,900 tons of synthetic fibre polymers, an increase of 4.52%; and 307,900 tons of synthetic fibres, a decrease of 6.69%.
In 2007, the Group's output-to-sales ratio and receivable recovery ratio were 100.07% and 100.04%, respectively. The Group's total import/export trade revenue (excluding crude oil imports) was US$1,784 million, up 13.84% from the previous year.
Of the Group's cost of sales, crude oil costs accounted for RMB34,456.3 million or 65.45% of the Group's annual cost of sales. The average cost of crude oil processed was RMB3,865.85 per ton, up 2.26% over the previous year. The crude oil costs increased by RMB1,148.7 million as compared to 2006.
During the Year, the Group made significant efforts with respect to the construction of key projects. The 380,000-ton/year ethylene glycol plant, the 3,300,000-ton/year diesel hydrogenation project and the 1,200,000-ton/year delayed coking plant commenced operation on 3 March, 18 June and 12 December respectively. The project of adding flue gas desulphurization facilities to the boilers of coal-fired power plants completed the 168-hour test run in late September. The 620-ton/hour steam-boiler and 100 megawatt power generation project successfully commenced power generation on 30 December 2007. The completion and commencement of such projects laid a solid foundation for the Group's efforts on structural enhancement, energy conservation and emission reduction. Besides, the Shanghai Secco 900,000-ton/year ethylene joint-venture project between the Company, Sinopec Corp. and BP Chemicals East China Investments Ltd. operated in a normal manner in 2007, whereby 1,003,000 tons of ethylene were produced during the Year, representing an increase of 25,000 tons over the previous year.
Looking forward, Mr. Rong Guangdao said, "In 2008, petrochemical companies will be exposed to a number of challenges: high oil prices that is becoming a long term trend; possible new changes to the business cycle of the global petrochemical industry; the State's control over prices of domestic petroleum products that has not been lossened up; the impact of a tightening monetary policy; the accelerated RMB appreciation; the export tax rebates, the EU's REACH legislation, and so forth. In response to the changes in the foreign and domestic macro-economic environment, the Group will aim for a full implementation of its overall cost leadership strategy and strive for the building of a harmonious enterprise. It will further optimize its resource allocation; enhance the "Three Basics" management; enhance safety and environmental protection; emphasize energy conservation and emission reduction; speed up reforms and developments; further enhance the development of team structure and develop corporate culture; with a view to continuously increasing the enterprise's market competitiveness and improving its risk management, and striving to continue to achieve satisfactory operating results in 2008."
Shanghai Petrochemical is one of the largest petrochemical companies in China and was one of the first Chinese companies to complete a global securities offering. Located in the Jinshan District which is at the southwest of Shanghai, it is a highly integrated petrochemical enterprise which processes crude oil into a broad range of products in synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products.
This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks such as: the risk that the PRC economy may not grow at the same rate in future periods as it has in the last several years, or at all, the risk that the PRC government's implementation of macro-economic control measures to curb over-heating of the PRC economy may adversely affect the company; uncertainty as to global economic growth in future periods; the risk that prices of the Company's raw materials, particularly crude oil, will continue to increase; the risk of not being able to raise the prices of the Company's products as is appropriate thus adversely affecting the Company's profitability; the risk that new marketing and sales strategies may not be effective; the risk that fluctuations in demand for the Company's products may cause the Company to either over-invest or under-invest in production capacity in one or more of its four major product categories; the risk that investments in new technologies and development cycles may not produce the benefits anticipated by management; the risk that the trading price of the Company's shares may decrease for a variety of reasons, some of which may be beyond the control of management; competition in the Company's existing and potential markets; and other risks outlined in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update this forward-looking information, except as required under applicable law.
Sinopec Shanghai Petrochemical Company Limited
2007 Annual Results
(Prepared under International Financial Reporting Standards)
Consolidated Income Statement (Audited)
For the years ended 31 December
2007 2006
RMB'000 RMB'000
Turnover 55,328,384 50,599,485
Sales taxes and surcharges (1,073,695) (681,362)
Net sales 54,254,689 49,918,123
Other income 93,900 282,142
Cost of sales (52,646,516) (49,182,232)
Gross profit 1,702,073 1,018,033
Selling and administrative expenses (504,712) (521,990)
Other operating income 216,553 297,394
Other operating expenses
Employee reduction expenses (208,013) (83,603)
Others (313,245) (156,927)
Total other operating expenses (521,258) (240,530)
Profit from operations 892,656 552,907
Financial income 82,280 137,997
Financial expenses (260,206) (303,386)
Net financing costs (177,926) (165,389)
Investment income 770,725 --
Share of profits of associates
and jointly controlled entities 665,897 576,682
Profit before taxation 2,151,352 964,200
Taxation (468,216) (53,238)
Profit after taxation 1,683,136 910,962
Attributable to:
Equity shareholders of the Company 1,634,080 844,407
Minority interests 49,056 66,555
Profit after taxation 1,683,136 910,962
Basic earnings per share RMB 0.23 RMB 0.12
Dividends attributable to the year 648,000 288,000
For further information, please contact:
Ms. Christy Lai / Ms. Patricia Tse
Rikes Communications Limited
Tel: +852-2520-2201
Fax: +852-2520-2241
