Jilin Chemical Industrial has reported the largest annual net loss by an H share, 1.81 billion yuan (about HK$1.69 billion), due to huge provisions against obsolete inventory and uncollected receivables.
The company also said its A shares, which are traded in Shenzhen, had been renamed ST Jilin Chemical Industrial after it posted two consecutive years of losses. ST (special treatment) means the shares will be suspended if the price rises or falls 5 per cent.
The petrochemical sector was plagued by overcapacity and falling demand last year but Jilin's older machinery and technology meant its erosion of competitiveness against imports was more acute.
Turnover fell 6.5 per cent to 12.61 billion yuan. Jilin booked 559.61 million yuan of provisions on bad debts and 171.17 million yuan on old inventory but gave no details on accounts receivable.
In 2000, Jilin reported a net loss of 835.99 million yuan after a 602 million yuan write-off of old production facilities, a 298 million yuan lay-off programme involving 7,000 staff and 37.1 million yuan of inventory write-offs.
In the first half of last year it lost 641.89 million yuan, despite 0.2 per cent year-on-year growth in turnover to six billion yuan, after making provisions of 541.23 million yuan for bad debt and 97.27 million yuan for obsolete inventory.