Beijing Yanhua sees 80pc profit rise
The plastics maker envisages a substantial increase as industrial demand is up but costs grow only slightly
Sinopec Beijing Yanhua Petrochemical, China's largest maker of resins and plastics, expects to post a net profit growth of up to 80 per cent this year, buoyed by strong industrial demand and slight increases in material costs.
A company spokesman said the reasons behind the sharp improvement included a larger increase in product prices compared with raw material costs.
'Next year, we expect product prices to remain relatively high as the economy is still growing at a fast pace,' he said, citing strong demand from the car tyre industry.
The H share, a subsidiary of Asia's largest oil refiner China Petroleum & Chemical (Sinopec), said its main raw material was light industry oil, which is refined from crude oil.
The company met its full-year pre-tax profit target of 530 million yuan (HK$492.37 million) late last month, Bloomberg reported. Last year, it posted an audited pre-tax profit of 330.7 million yuan and after-tax profit of 209.1 million yuan.
According to a report by Sinopec News, a company publication, Sinopec Beijing Yanhua achieved its profit target earlier than expected and the profit achieved so far was a record high, despite the impact of the Sars epidemic and facility maintenance.
The company also saved 20 per cent of its interest expenses this year by shortening the duration of its loans and taking advantage of supplier credits.
Sinopec Beijing Yanhua makes resins and plastics, synthetic rubber and basic organic chemicals.
According to a Core Pacific-Yamaichi research report, the company's eight major products registered selling price increases ranging from 8 to 58 per cent year on year in the first nine months of this year.
While total production fell 4.4 per cent due to facilities maintenance and upgrades, Core Pacific believed the full-year volume would be sustained at last year's 1.43 million tonnes.
The Taiwanese brokerage estimated the company's total turnover rose by 19 per cent during the same period, and forecast a 23.6 per cent turnover growth for the whole of this year.
China's strong industrial growth has fuelled demand for oil and petrochemical products.
From January to September, the country imported 67.21 million tonnes of crude oil, up 29.8 per cent year on year. Due to a sharp rise in the oil price, the dollar value of oil imports rose 60.1 per cent to US$14.63 billion.
The import of petrochemicals in the same period has grown at a slower pace of 3.3 per cent in volume to 59.3 million tonnes. Higher prices meant their value surged 27.2 per cent to US$38.71 billion.
Chinese oil refineries and petrochemical plants such as Sinopec Beijing Yanhua and its sister firms, Sinopec Shanghai Petrochemical, Sinopec Yizheng Chemical and Fibre, and Sinopec Zhenhai Refining, have expanded production capacities to meet surging domestic demand. All but Sinopec Yizheng have posted strong profit growth this year, on the back of a global economic recovery which sent petrochemical prices upwards.
Analysts expect the petrochemical industry's boom to peak late next year or early 2005.