Sinofert posts 1.4b yuan net loss
Sinofert Holdings, China's largest fertiliser producer and distributor, expects to return to the black this year after posting a wider than expected 1.44 billion yuan (HK$1.63 billion) net loss for last year - its worst performance in 11 years.
Chief executive Du Keping said a rebound in product prices and demand and an absence of inventory write-downs meant it was profitable in January and February.
The listed unit of state-owned oil and chemical producer and distributor Sinochem Corp yesterday unveiled the hefty loss, much worse than the average forecast for a 379.3 million yuan loss estimated by 11 analysts polled by Thomson Reuters.
Its share price closed 4.8 per cent lower at HK$4.40 after the noon results announcement.
The loss was partly due to 760.1 million yuan of inventory write-down, mainly on potassium fertiliser whose price plunged from US$1,000 a tonne at the start of last year to as low as US$355 as the slump and high fertiliser prices forced farmers to cut demand.
China imports around two-thirds of its potassium fertiliser needs, and Sinofert handles some 55 per cent of the imports.
The firm's overall sales volume fell 6 per cent to 15.23 million tonnes last year, with potassium fertiliser down 41 per cent to 2.36 million tonnes.
Du expected this year's potassium sales volume to grow at least 20 per cent, and Sinofert has set an overall sales target of 21 million tonnes for 2012, implying an average annual growth of 11.3 per cent.
Despite overcapacity in nitrogenous fertiliser, Sinofert is doing a feasibility study to build a 3.2 million tonnes a year urea plant in Ningxia autonomous region. Subject to Beijing's approval, the project will take five years to build and will be among the most cost competitive in the industry, Du said.
Sinofert controls or has minority stakes in plants with combined annual capacity of 10 million tonnes.
Du expects Sinofert to complete the acquisition of its parent's 23 per cent stake in mainland-listed potassium fertiliser maker Qinghai Salt Lake Industry in this year's first half.
Gone to waste
Sinofert was hit by plunging potassium fertiliser prices
The firm's loss was partly due to inventory write-downs of, in yuan: 760m yuan
