Titan puts faith in oil imports after sharp income fall
Titan Petrochemicals Group is pinning its hopes on a higher growth rate in mainland crude oil imports to help improve this year's profit, hit by lower tanker lease rates and higher interest and depreciation expenses.
The oil transport and trading company yesterday posted a 24.33 per cent fall in net profit to $303.03 million for last year, despite turnover tripling to $10.46 billion due to a 42 per cent expansion in oil transport capacity.
Chief executive Barry Cheung said that China's crude import growth slowed sharply last year, resulting in lower freight rates, while high oil prices increased its vessels' fuel costs.
'We are reasonably optimistic that this year's outlook is better because the market conditions are more favourable,' he said, adding he expected mainland crude imports to see a 10 per cent to 15 per cent rise in volume this year.
He hoped the growth would help offset interest expenses which soared 690 per cent last year to $312.86 million after it issued a $3.1 billion bond, and depreciation expenses which surged 154 per cent to 245.16 per cent after the fleet expansion.
The growth rate of China's crude oil imports slowed to 3.3 per cent last year with 127 million tonnes imported, a far cry from the 34.3 per cent recorded in 2004, according to the Ministry of Commerce.
Mr Cheung's projection came despite National Development and Reform Commission deputy director Zhang Guobao last month saying that China aims to cap its crude imports this year at last year's level.
'I'm not sure how this may be achieved, given the government's own projection of a 6 per cent rise in crude oil demand this year and close to zero domestic output growth,' Mr Cheung said, adding figures in the first two months supported his optimism.
In this year's first two months, import growth picked up to 34.3 per cent from the same period last year with 24.4 million tonnes imported, figures from the General Administration of Customs showed.
The nation is the third-largest oil importer after the United States and Japan.
The central government is determined to cut down excessive growth in the country's energy consumption by setting a goal to cut energy per unit of gross domestic product by 4 per cent each year over the next five years.
It also increased refined oil prices last month.