Sinofert's core profit up 31pc on price rise

PUBLISHED : Tuesday, 28 August, 2007, 12:00am
UPDATED : Tuesday, 28 August, 2007, 12:00am
 

Sinofert Holdings, the fertiliser distribution unit of mainland oil trader Sinochem Corp, said first-half underlying profit surged 31 per cent as selling prices increased amid higher demand from farmers.


Net profit rose 14 per cent from a year earlier to HK$530 million on a 39 per cent increase in sales to HK$14.34 billion.


Excluding a HK$79 million loss in fair value of convertible loan notes, underlying profit should be HK$610 million.


Sinofert, aiming to boost its share in the domestic market to 17 per cent by the end of the year from 13.5 per cent last year, sold 29 per cent more fertilisers to 7.9 million tonnes in the first six months.


Gross profit margin edged up to 8.82 per cent from 8.14 per cent, as growth in average price was faster than the increase in cost, said chief financial officer Zhang Baohong.


Sinofert, which is expanding into upstream production, said the purchase of fertiliser assets from Sinochem was expected to be completed this year. It was still awaiting the results of due diligence and appraisal on the assets before deciding on the price.


The company is planning to buy 18.49 per cent of Shenzhen-listed Qinghai Salt Lake Potash, 51 per cent of Sinochem Shandong, which has annual capacity of 600,000 tonnes of compound fertilisers, and 40 per cent of Tianjin Sinochem, which has 600,000 tonnes of urea.


Mr Zhang said the company had HK$3.6 billion cash on hand and a HK$10.5 billion credit line available for acquisitions, capital spending and working capital. Still, the company was not ruling out raising funds from share or bond sales.


Rich harvest


Sinofert's first-half net profit rose 14 per cent to, in HK$530m


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