Production Capacity and Turnover Grow Steadily; Profit drops due to
rises in Crude Oil Costs HONG KONG, Aug. 29
/Xinhua-PRNewswire-FirstCall/ -- Sinopec Shanghai Petrochemical
Company Limited ("Shanghai Petrochemical" or the "Company")
(HKEx:338; SSE: 600688; NYSE: SHI) announced today the unaudited
operating results of the Company and its subsidiaries (the "Group")
for the six-month period ended June 30, 2006 (the "Period"). Under
the International Financial Reporting Standards, turnover for the
Period increased by approximately 7.10% over the corresponding
period of the previous year to approximately RMB23.4403 billion;
profit before taxation was RMB52.699 million, a decrease of 97.56%
over the corresponding period of the previous year; profit
attributable to equity shareholders was RMB5.693 million, a
decrease of 99.68% as compared to the corresponding period of the
previous year; and basic earnings per share was RMB0.001 (2005
interim: RMB0.245). The board of directors did not recommend any
interim dividend for 2006 (2005 interim: Nil). Mr. Rong Guangdao,
Chairman of Shanghai Petrochemical, said, "Due to unfavorable
factors such as rising international crude oil prices, surging
prices of raw materials and fuels in China, a slowdown in price
increases with respect to petrochemical products and that the
adjustments in prices of petroleum products had not reflected the
rising prices of international crude oil, the Group's performance
dropped substantially as compared to the corresponding period of
the previous year. However, during the Period, the Group strived to
capitalize on the opportunities arising from the overall steady and
rapid growth of the PRC domestic economy in general and the
petrochemical industry in particular, and by further optimizing
production operation and carrying out industrial restructuring, the
Group was able to maintain smooth production and operations. The
period of time spent on unscheduled production suspension was cut
substantially, while the output-to- sales ratio for products and
the receivable recovery ratio were maintained at satisfactory
levels." In the first half of 2006, the Group realized net sales of
RMB23.1243 billion, an increase of 7.51% as compared to the
corresponding period of the previous year. Continued increases in
the prices of energy and raw materials and the upward price
adjustments for petroleum products have pushed up the average sales
prices of petroleum products, resins and plastics, but the increase
in sales prices was lower than the price increase in energy and raw
materials; and there was a slight decrease in the average sales
prices of intermediate petrochemicals and synthetic fibres. Among
the four major product categories, net sales of petroleum products
and resins and plastics increased by 9.45% and 9.97%, respectively,
as compared to the corresponding period of the previous year, while
their average selling prices (excluding tax) increased by 20.24%
and 2.02%, respectively. Net sales of intermediate petrochemicals
and synthetic fibres decreased by 12.26% and 5.43%, respectively,
and their average selling prices (excluding tax) decreased by 4.07%
and 2.13%, respectively. During the Period, the Group processed
4,447,100 tons of crude oil (of which 76,800 tons were
sub-contracting processed crude oil) and produced 400,600 tons of
gasoline, 1,329,100 tons of diesel and 252,600 tons of jet fuel.
The output of synthetic fibre monomers and synthetic fibre polymers
were 382,100 tons and 300,000 tons, respectively, representing
increases of 3.20% and 4.44%, respectively, as compared to the
corresponding period of the previous year. The output of propylene
and synthetic resins and plastics were 263,700 tons and 556,000
tons, respectively, representing increases of 0.30% and 5.12%,
respectively, over the corresponding period of the previous year.
The weighted average cost of crude oil was RMB3,706.77 per ton in
the first half of the year, representing an increase of 28.90% as
compared to the corresponding period of the previous year, causing
the total cost of crude oil processed to reach RMB16,199.7 million,
an increase of 22.68% as compared to the corresponding period of
the previous year. Cost of crude oil of the Group accounted for
70.64% of cost of sales. In the first half of 2006, the Group's
capital expenditures amounted to RMB1.0808 billion, comprising the
3,300,000-ton/year diesel hydrogenation project and the
380,000-ton/year ethylene glycol project. The above two projects
are scheduled for basic completion by the fourth quarter of this
year and the first quarter of next year, respectively. Meanwhile,
the Group is actively rolling out the preparatory work for the next
round of new development projects such as a flue-gas
desulfurization project, a 620- ton/hour steam boiler, a
100-megawatt power generating unit, a 1,200,000- ton/year delayed
coking facility and the 600,000-ton/year PX aromatics complex.
Construction of these projects is expected to commence within the
year. Looking ahead, Mr. Rong Guangdao, said, "In the second half
of 2006, due to the insufficient crude oil production capacity,
coupled with geo-political risks, it is anticipated that the global
supply and demand of crude oil will remain seriously unbalanced and
crude oil prices will continue to remain high and even to peak at
new highs. On the other hand, despite a rapid increase in the
output of petrochemical products following the progressive
commencement of production of projects with new and expanded
capacity, the growth in demand will slow down as the government's
macro-economic control measures are expected to be stepped up in
the second half of the year, thus likely causing the prices of
certain products to fall. Furthermore, rising prices of energy and
raw materials will cause the production costs of petrochemical
enterprises to increase. Exposed to the above unfavorable factors,
the Group will adjust its developing approach in line with such
economic changes, focus on optimization and adjustment; improve
upon the management philosophy; strengthen detailed management;
improve work procedures; and accelerate the pace of reform programs
so as to maintain steady development of the Group." Shanghai
Petrochemical is one of the largest petrochemical companies in the
PRC and was one of the first Chinese companies to make a global
securities offering. Located in Jinshan District in the southwest
of Shanghai, it is a highly integrated petrochemical complex which
processes crude oil into a broad range of products in synthetic
fibres, resins and plastics, intermediate petrochemicals and
petroleum categories. This press release contains statements of a
forward-looking nature. These statements are made under the "safe
harbor" provisions of the U.S. Private Securities Litigation Reform
Act of 1995. You can identify these forward- looking statements by
terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements.
The accuracy of these statements may be impacted by a number of
business risks and uncertainties that could cause actual results to
differ materially from those projected or anticipated, including
risks related to: the risk that the PRC economy may not grow at the
same rate in future periods as it has in the last several years, or
at all, including as a result of the PRC government's
macro-economic control measures to curb over-heating; uncertainty
as to global economic growth in future periods; the risk that
prices of the Company's raw materials, particularly crude oil, will
continue to increase; not be able to raise its prices accordingly
which would adversely affect the Company's profitability; the risk
that new marketing and sales strategies may not be effective; the
risk that fluctuations in demand for the Company's products may
cause the Company to either over-invest or under-invest in
production capacity in one or more of its four major product
categories; the risk that investments in new technologies and
development cycles may not produce the benefits anticipated by
management; the risk that the trading price of the Company's shares
may decrease for a variety of reasons, some of which may be beyond
the control of management; competition in the Company's existing
and potential markets; and other risks outlined in the Company's
filings with the U.S. Securities and Exchange Commission. The
Company does not undertake any obligation to update this
forward-looking information, except as required under applicable
law. Encl: Consolidated Income Statement (Unaudited) For further
information, please contact: Ms. Sally Wong / Ms. Janet Lee Rikes
Communications Limited Tel: (852) 2520 2201 Fax: (852) 2520 2241
Sinopec Shanghai Petrochemical Company Limited 2006 Interim Results
(Prepared under International Financial Reporting Standards)
Consolidated Income Statement (Unaudited) Six-month period ended 30
June 2006 2005 RMB'000 RMB'000 Turnover 23,440,275 21,886,472 Less:
Sales taxes and surcharges (316,004) (378,135) Net sales 23,124,271
21,508,337 Cost of sales (22,931,817) (18,949,942) Gross profit
192,454 2,558,395 Selling and administrative expenses (281,013)
(196,886) Other operating income 130,536 137,365 Other operating
expenses: Employee reduction expenses (19,810) (90,792) Others
(42,289) (43,164) Total other operating expenses (62,099) (133,956)
(Loss)/profit from operations (20,122) 2,364,918 Share of profits/
(losses) of associates 180,156 (93,723) Net financing costs
(107,335) (113,407) Profit before taxation 52,699 2,157,788
Taxation (11,390) (359,960) Profit after taxation 41,309 1,797,828
Attributable to: Equity shareholders of the Company 5,693 1,763,442
Minority interests 35,616 34,386 Profit after taxation 41,309
1,797,828 Basic earnings per share RMB0.001 RMB0.245 DATASOURCE:
Sinopec Shanghai Petrochemical Company Limited CONTACT: Ms. Sally
Wong or Ms. Janet Lee, Rikes Communications Limited,
+852-2520-2201, Fax: +852-2520-2241
Copyright