Phase four facilities add battery of profit generators for Sinopec

PUBLISHED : Friday, 23 August, 2002, 12:00am
UPDATED : Friday, 23 August, 2002, 12:00am

Sinopec Shanghai Petrochemical expects its bottom line will be helped in the second half by higher refining volume, greater sales of products with increased profit margins and cost savings from new facilities.

Lu Yiping, chairman of the diversified petrochemical making subsidiary of Asia's largest oil refiner China Petroleum & Chemical (Sinopec), said the company would increase crude oil refining volume to 4.1 million tonnes in the second half from 3.4 million tonnes in the first six months.

Mr Lu also said cost savings from completion of its phase four plant facilities in the second quarter would be reflected in the second-half results. The facilities include a 66,000-tonne a year acrylic fibre renovation project, a 200,000-tonne polypropylene plant, a 250,000-tonne polyethylene plant, an ethylene plant expansion project and a 100-megawatt thermal power plant expansion.

The H share spent about 1.7 billion yuan (HK$1.5 billion) on the projects in the first half.

Company secretary Zhang Jingming said expanding the ethylene plant would cut energy consumption by 15.6 per cent, and improve yield by one percentage point.

The company on Wednesday posted a 30.5 per cent year-on-year rise in net profit to 208.6 million yuan (about HK$195.5 million), due to a lower percentage fall in product prices relative to the cost of its main raw material - crude oil.

Management warned that raw material and product prices would remain highly volatile, which made profit predictions difficult.

Mr Zhang estimated that each US dollar fall in per barrel oil price translated into monthly cost savings of about 40 million yuan.

To improve profitability, the firm increased output of more profitable products such as synthetic fibres, resins and plastics.