Achieving a Turnaround from Loss to Net Profit of RMB1,001.9 Million
HONG KONG, Aug. 27 /PRNewswire-Asia/ -- Sinopec Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or the "Company") (HKEx: 338; SSE: 600688; NYSE: SHI) announced today the unaudited operating results of the Company and its subsidiaries (the "Group") for the six-month period ended June 30, 2009 (the "Period") prepared under International Financial Reporting Standards ("IFRS").
Under IFRS, turnover of the Group during the Period amounted to RMB 21,178.6 million (2008 interim: RMB 32,867.1 million). Profit before taxation amounted to RMB 1,368.7 million, a year-on-year increase of RMB 1,802.5 million. Profit after taxation and minority interests amounted to RMB 1,001.9 million, a year-on-year increase of RMB 1,360.0 million. Basic earnings per share was RMB 0.139 (basic loss per share for 2008 interim: RMB 0.050). The board of directors does not recommend the payment of any interim dividend for 2009 (2008 interim: Nil).
Mr. Rong Guangdao, Chairman of Shanghai Petrochemical, said, "In the first half of 2009, the global economic crisis was still spreading in both breadth and depth. The petrochemical industry witnessed a downturn of the cycle and market demand has not completely recovered in general. However, international crude oil prices saw a significant slump year-on-year and a new pricing mechanism for refined oil products has been introduced in China. Under such mixed conditions, the Group pushed ahead in full scale various work on production operation as well as reform and development. The frequency and duration of non-scheduled shutdowns of major production plants decreased over the same period last year. The major technical and economic targets were satisfactorily achieved. The output-to-sales ratio and the receivable recovery ratio remained at satisfactory levels. Therefore, the Group achieved a significant increase in profits during the Period."
In the first half of 2009, the Group realized net sales of RMB19,083.9 million, down 40.91% over the same period last year, among which net sales derived from petroleum products, intermediate petrochemicals, resins and plastics and synthetic fibres decreased by 45.29%, 61.70%, 32.91% and 38.86% year-on-year respectively. Such decreases were mainly attributable to decreases in product prices of the abovementioned products due to decreases in raw material and energy prices, as well as decreases in sales volumes.
As for production operation, the Group processed 4,194,900 tons of crude oil, a decrease of 871,600 tons or 17.20% year-on-year. Of the total processed amount, imported crude oil and offshore crude oil amounted to 3,648,800 tons and 546,100 tons respectively. Production output of gasoline was 436,700 tons, up 4.65% year-on-year. Production outputs of diesel and jet fuel were 1,272,300 tons and 302,300 tons respectively, down 32.67% and 10.27% year-on-year respectively. The Group produced 439,300 tons of ethylene and 236,700 tons of propylene, down 8.65% and 10.68% year-on-year respectively. The Group also produced 540,500 tons of synthetic resins and plastics, an increase of 0.82% year-on-year; 427,800 tons of synthetic fibre monomers, 289,200 tons of synthetic fibre polymers and 120,500 tons of synthetic fibres, representing decreases of 12.32%, 5.06% and 18.42% year-on-year respectively. The Group's output-to-sales ratio and receivable recovery ratio in the first half of the year were 99.82% and 98.03% respectively.
In the first half of 2009, the Group's average unit cost of crude oil processed decreased by RMB 2,525.11 / ton on a year-on-year basis to RMB 2,543.77 / ton. With the significant drop in the average price of crude oil and a decline in the volume of crude oil processed, the Group's total cost of crude oil processed during the Period decreased by 59.33% year-on-year to RMB 10,443.8 million. The crude oil costs accounted for 59.32% of the Group's cost of sales in the first half of the year.
During the Period, the construction of the Group's structural adjustment projects continued to move forward. The construction of new projects including the 600,000-ton per year PX aromatics complex and the 150,000-ton per year C5 separation plant were basically completed according to schedule. They are currently in preparation for start-up and are expected to be on stream in the second half of 2009. The flue gas desulphurization facilities added to No. 3 and No. 4 furnaces of coal-fired power plants and the 220,000-volt transformer station renovation project commenced operation as scheduled.
Looking ahead, Mr. Rong Guangdao said, "In the second half of 2009, global economies are expected to enter a period of slow recovery and slow growth. International crude oil prices may continue to hover at relatively high levels and may show a trend of going up further quarter-by-quarter. The Chinese Government may still exercise control over the pricing of domestic refined oil products when international crude oil prices hit their highs. In addition, although the economic operation in China's petrochemical industry has shown a trend of bottoming out, stabilising and rebounding, the Chinese export situation looks grim. While there may be inadequate plant utilization for certain downstream industries, certain petrochemical products may be affected by a flood of products from those newly-built plants coming on stream. Certain petrochemical products are severely hit by imports. Market competition will be intense as ever. Therefore, we are not optimistic about the operational situation that the Group is faced with. In the second half of 2009, the Group will strive to ensure a safe, stable and optimised operation; further improve its work on crude oil purchasing and products sale; ensure a successful implementation of the construction and putting into operation of the structural adjustment project; enhance the management system of the Company; and continuously reinforce its human resource, with a view to further improving the Company's operating efficiency."
Shanghai Petrochemical is one of the largest petrochemical companies in the PRC and was one of the first Chinese companies to effect a global securities offering. Located in Jinshan District in the southwest of Shanghai, it is a highly integrated petrochemical complex which processes crude oil into a broad range of products in synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum categories.
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 related to: 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, including as a result of the PRC government's macro-economic control measures to curb over-heating; 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; not be able to raise its prices accordingly which would adversely affect 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.
For the Consolidated Income Statement (Unaudited), please visit:
http://www.prnasia.com/sa/attachment/2009/08/20090827597277.pdf
For further information, please contact:
Ms. Leona Zeng / Ms. Christy Lai
Rikes Hill & Knowlton Limited
Tel: +852-2520-2201
Fax: +852-2520-2241
