Higher prices lift China Oriental

PUBLISHED : Wednesday, 24 March, 2010, 12:00am
UPDATED : Wednesday, 24 March, 2010, 12:00am

Steelmaker China Oriental Group, which recorded a 1,909 per cent growth in net profit to 884 million yuan (HK$1.004 billion) last year, expects double-digit growth in sales volume and selling prices this year.

The Hebei-based company said the better than expected profit was mainly due to a 53 per cent increase in sales volume to 6.9 million tonnes last year, and higher selling prices.

Chairman and chief executive Han Jingyuan said the selling prices for its major products - billets, strips, H-section steel and steel sheets - had soared by 1,000 to 1,300 yuan per tonne in the first quarter of this year.

'We believe steel prices will continue to go up, along with other raw materials,' he said.

Revenue for the year was 20.6 billion yuan, up 6 per cent from 19.4 billion yuan in 2008, while gross profit margin improved to 9.7 per cent from 2.7 per cent.

Han said China Oriental's capacity stood at 11 million tonnes but he estimated actual output this year would be about 10 million tonnes.

H-section steel, which is widely used in the construction of ships, trains, and highways and other infrastructure, would account for more than half of the output, he said.

The company, the mainland's biggest producer of H-section steel, earned 7.4 billion yuan from the sale of 2.46 million tonnes of H-section steel last year.

The company had intended to release its annual report on the Hong Kong stock exchange website before 2pm yesterday but had to postpone the release to 4.30pm.

The management said it was because the stock exchange's system was too busy in dealing with more than 30 listed companies' requests to run annual results on the website around lunch time.

The company declared a final dividend of 8.6 HK cents per share. Shares of China Oriental gained 0.92 per cent to close at HK$3.28 yesterday.