Steel pipe maker Chu Kong sees return to profit after three years in the red

Chu Kong Petroleum and Natural Gas Steel Pipe is optimistic of returning to profit in 2017 as it expects a downturn in the industry to bottom out this year and rebound next year.

One of China’s largest producers of steel pipes for the oil and gas sector, Chu Kong on Friday unveiled its third consecutive annual underlying net loss, amounting to 883 million yuan last year.

When including fixed assets impairment due to low plant utilisation, write-downs on the value of inventory and accounts receivables, the net loss came to 1.5 billion yuan. Sales dived 43 per cent to 1.4 billion yuan.

In 2015, it suffered a pre-tax loss of 484 million yuan, when an investment property fair-value accounting gain was excluded, compared to a loss of 452 million yuan in 2014 on the same basis.

The Panyu, Guangzhou-based firm is majority controlled by chairman Chen Chang.

His daughter, executive director Lilian Chen Zhaonian, blamed the dismal results on construction delays in China’s oil and gas pipeline projects caused by slumping oil and gas prices. An anti-corruption drive that saw the departure of many senior executives of the nation’s state-backed oil giants also had an impact.

“But we expect our industry cycle to see a bottom this year, followed by a significant rebound from next year,” she told reporters, pointing to Beijing’s recently announced plans to build 7,000km of oil pipelines and 40,000km of gas pipelines in the five years to 2020.