Sinofert sees 14.9pc income expansion
Sinofert Holdings, a listed fertiliser unit of mainland oil firm Sinochem Corp, posted a 14.9 per cent increase in net profit for last year, shrugging off a 24.5 per cent decline in sales of potassium fertiliser stemming from protracted procurement talks with foreign suppliers.
Sinofert, the mainland's largest fertiliser distributor, reported a net profit of HK$896.24 million, a rise from HK$779.42 million in 2005 but 4 per cent short of the HK$933.61 million mean estimate of eight analysts polled by Thomson First Call.
Turnover grew 9.7 per cent to HK$21.12 billion, due to a 12.5 per cent increase in sales volume to 12.57 million tonnes.
However, this was partly offset by lower average price per tonne of sales as it sold more domestic products which are cheaper than imports.
Gross profit margin edged up to 8.08 per cent from 8.02 per cent in 2005, thanks largely to the margin improvement in potassium fertiliser sales to 12.6 per cent from 10.7 per cent, as the company used more low-cost inventory and cut imports.
Potassium fertiliser accounted for 42 per cent of the company's overall sales volume, compared with 25 per cent for nitrogen fertilisers, 14 per cent for phosphate fertilisers and 19 per cent for compound fertilisers.
Potassium is a non-renewable resource whose deposits are highly concentrated.
The United States, Canada, Russia, Belarus and Germany account for 91 per cent of global reserves.
China, the world's largest fertiliser user, relies on imports for about 75 per cent of its potassium fertiliser needs.
Sinofert handles 74 per cent of the nation's sea-borne imports of the product.
An agreement on last year's annual contract negotiation with Belarus was only reached in July and the company estimates eight months of sales were lost.
This resulted in a 24.5 per cent drop in last year's sales of potassium fertiliser to 3.89 million tonnes.
The loss was more than offset by higher domestic sales of potassium fertiliser and a 105 per cent jump in nitrogen fertiliser sales, a 16 per cent growth in phosphate fertiliser sales and a 34 per cent rise in compound fertiliser sales.
Output of self-produced fertilisers also grew 36 per cent to 2.55 million tonnes.
Chief executive Du Keping said the company plans to spend HK$330 million this year to expand its fertiliser capacity, and HK$20 million to enlarge its sales network.
The company aims to raise the number of sales points to 2,000 by the end of next year from 1,375 at the end of last year.
It also plans to increase annual production capacity to eight million tonnes by the same time through acquisition of its parent's assets, as well as plant construction and expansion.
Earnings per share amounted to 15.43 HK cents.
A final dividend of 2.31 HK cents per share was proposed.
