Sinofert Holdings

Sinofert lifts targets after core earnings rise 43pc

PUBLISHED : Saturday, 29 March, 2008, 12:00am
UPDATED : Saturday, 29 March, 2008, 12:00am

Sinofert Holdings, the country's largest fertiliser distributor, posted a 43.24 per cent increase in underlying net profit last year and said it planned to raise its market share on the mainland to 25 per cent by 2010 from 17 per cent last year.

To better ensure supply, the company also aimed to boost its annual production capacity through mergers and acquisitions to 10 million tonnes this year, up from 7.8 million tonnes last year, and to 15 million tonnes by 2010, chief executive Du Keping said.

The latest goals follow a string of acquisitions in the past two years from its parent Sinochem Corp and other companies, which raised production capacity from 2.73 million tonnes in 2005.

The company yesterday reported a net profit of HK$663.31 million, down 26 per cent from 2006. The figure included a HK$623.18 million decline in fair value of the derivative component of a convertible loan note issued in 2006, due to Sinofert's rising share price.

Core net profit rose 43.2 per cent to HK$1.28 billion, 4.92 per cent more than the HK$1.22 billion average estimate of 11 analysts polled by Thomson Financial.

Turnover jumped 39.34 per cent to HK$29.44 billion.

Sinofert aimed for turnover growth of at least 20 per cent this year, chief financial officer Zhang Baohong said.

Meanwhile, Mr Du said Sinofert was still negotiating with Canada's PotashCorp on this year's annual import contract for potassium fertiliser.

'This year's price rise elsewhere is pretty high, but I expect the rise for China will be lower, as we have substantial domestic production, an alternative supply from Russia via land transport and our status as a long-term major consumer,' he said.

India has reportedly agreed to a 130 per cent price rise to US$625 a tonne from US$270 in 2006 for Canada's potassium fertiliser.

China imports about 50 per cent of its consumption of this type of fertiliser from Canada and 20 per cent from Russia. Mr Du would not disclose the contract price agreed on with Russia earlier this year.

In 2006, protracted negotiations saw Sinofert receive shipments only in August, resulting in a 24.5 per cent drop in sales volume that year.

Sinofert has about two million tonnes of inventory that it can sell while it bargains with PotashCorp.

Its shares yesterday closed 9.18 per cent higher at HK$6.90.