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CNOOC

Chu Kong expects to do better this year

PUBLISHED : Thursday, 31 March, 2011, 12:00am
UPDATED : Thursday, 31 March, 2011, 12:00am

Chu Kong Petroleum and Natural Gas Steel Pipe Holdings expects better fortunes this year after posting an 82.5 per cent net profit plunge last year as a result of delayed global pipeline projects following Europe's financial crisis and Beijing's economic tightening measures.

The Panyu, Guangdong-based firm had 313,000 tonnes of uncompleted steel pipe orders on its books at the end of the year, worth 2 billion yuan (HK$2.37 billion). It received a 66,000-tonne order valued at 700 million yuan from the shallow section of CNOOC's offshore Liwan gas production project this month.

The orders, to be delivered this year, boosted its book to 2.7 billion yuan. It also received a 12,000-tonne order from Kuwait this week. The orders compared to 1.68 billion yuan of sales last year, which fell 40.5 per cent from 2.83 billion yuan in 2009.

Net profit plunged to 70 million yuan from 401 million yuan. Gross profit margin was squeezed to 15.7 per cent from 22.7 per cent, due partly to an absence of more lucrative orders seen in 2009. Orders were also delayed as Europe's sovereign debt crisis cut project financing.

Sales to the European Union, Middle East and Asia, excluding China, together tumbled 73 per cent, while sales to the United States grew 55 per cent and mainland sales slid four per cent. Mainland sales account for 39 per cent of the total.

Executive director Lilian Chen Zhaonian expected this year's overall gross margin to rise to between 17 and 22 per cent.

Chu Kong plans to bid in April to supply 50,000 tonnes of pipes to the deepwater section of CNOOC's project, and tender for PetroChina's third west-east gas pipeline between Shaanxi province and Guangxi autonomous region. It also wants to bid for State Grid's 2.7 million tonnes of pipes required for its ultra-high-voltage grid networks by 2014, after winning 100,000 tonnes last year.

It is finalising talks to set up a 300,000 tonne-a-year joint-venture plant in the Middle East that may come on stream next year.

Order book

The firm had 313,000 tonnes of uncompleted steel pipe orders at the end of 2010, worth this, in yuan: 2b yuan