Profit Affected by High Oil Prices; Sales Soared to a Record High
HONG KONG, March 29 /Xinhua-PRNewswire-FirstCall/ -- Sinopec
Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or
the "Company") (HKEx: 338; SSE: 600688; NYSE: SHI) announced today
the audited operating results of the Company and its subsidiaries
(the "Group") prepared under the International Financial Reporting
Standards for the year ended December 31, 2006 (the "Year").
Turnover of the Group for 2006 amounted to RMB50,599.5 million,
representing an increase of 10.10% as compared to 2005. Profit
before tax was RMB964.2 million, representing a decrease of 57.85%
as compared to 2005. Profit attributable to equity shareholders of
the Company was RMB844.4 million, representing a decrease of 54.37%
as compared to 2005. Earnings per share was RMB0.12 (2005:
RMB0.26). The board of directors of the Company has recommended a
final dividend of RMB0.04 (inclusive of tax) (2005: RMB0.10),
equivalent to RMB4.00 per American Depositary Share. Mr. Rong
Guangdao, Chairman of Shanghai Petrochemical, said, "In 2006, the
world's economy maintained relatively fast growth while the global
petrochemical industry witnessed solid development in overall
terms. However, due to the continued rise in international crude
oil prices, the Group's production cost witnessed a substantial
rise as compared to 2005. In addition, the Chinese government
continued to maintain price controls on petroleum products. Despite
being granted a subsidy of RMB282.1 million by the Ministry of
Finance, the Group was unable to fully cover the loss arising from
the sales of petroleum products. As a result, the Group's economic
efficiency saw a substantial fall over 2005, even though its
turnover in 2006 broke the RMB50 billion threshold." In 2006, total
net sales of the Group increased by 10.46% as compared with 2005 to
RMB49,918.1 million. The demand for petrochemical products in China
remained strong, thus causing the price of many products to
increase as compared with 2005. The weighted average prices
(exclusive of tax) of synthetic fibres, resins and plastics,
intermediate petrochemicals and petroleum products increased 4.26%,
9.02%, 3.47% and 14.11%, respectively, as compared to 2005. In
2006, the Group processed 8,920,300 tons of crude oil, down 6.03%
over 2005. The Group produced 761,500 tons of gasoline, 2,742,100
tons of diesel oil and 533,800 tons of jet fuel, all representing
decreases in production outputs over 2005. The Group also produced
960,300 tons of ethylene and 517,700 tons of propylene, similar to
the respective figures for 2005. The Group produced 1,087,800 tons
of synthetic resins and polymers; 549,500 tons of synthetic fibre
monomers; 604,600 tons of synthetic fibre polymers; and 330,000
tons of synthetic fibres, representing increases of 1.94%, 11.29%
and 1.47% and a decrease of 7.46%, respectively, as compared to
2005. The Shanghai Secco 900,000 tons/year ethylene joint venture
project between the Company, Sinopec Corp. and BP Chemicals East
China Investments Ltd. operated in a normal manner in 2006, whereby
978,000 tons of ethylene were produced during the year, up 52.33%
over 2005. The Group's ethylene production output was among the
nation's top, while its production output of acrylic fibre
continued to top the nation. The Group's crude oil costs for the
Year amounted to RMB33,307.6 million, representing 67.72% of the
Group's cost of sales. The Group's crude oil costs increased by
RMB3,731.2 million as compared to 2005. The average cost of crude
oil processed was RMB3,780.56 per ton, up 17.84% over 2005. During
the Year, the Company made significant progress on the construction
of key projects. In particular, the 3,300,000 tons/year diesel
hydrogenation project and the 380,000 tons/year ethylene glycol
plant was mechanically completed in December. The Group's
structural adjustment project, which aims at further adjusting and
optimizing businesses and products, was fully commenced by the
year's end. The project includes the addition of flue gas
desulphurization facilities to the furnaces of the coal-fired power
plants, the 620 tons of steam/hour boiler, the 100MW power
generation unit project, the 1,200,000 tons/year delayed coking
plant project, among other projects. Looking ahead, Mr. Rong
Guangdao said, "In 2007, the steady and robust growth in both the
international and the domestic economies will bring about good
development potential to the petroleum and petrochemical industry.
The domestic petrochemicals market is expected to remain prosperous
due to the gradually increasing demand for petroleum, natural gas,
petroleum products and major petrochemicals. However, the Group
will still be exposed to a number of challenges: the fact that
international crude oil prices are expected to continue to
fluctuate at high levels; the State's refusal to loosen control
over prices of domestic petroleum products; intensifying market
competition caused by rapid expansion of domestic and foreign
production capacity of petrochemicals; and further reduction of
tariffs for imported petrochemicals. In response to the changes in
the economic environment, the Group will be committed to fully
implementing its strategy to streamline costs. Through
strengthening the development of the structural adjustment program,
strengthening internal management and carrying out reforms in a
pro-active and steady manner, the Group's competitiveness and
economic benefits will then be enhanced and improved." Shanghai
Petrochemical is one of the largest petrochemical companies in
China and was one of the first Chinese companies to complete a
global securities offering. Located in the Jinshan District which
is at the southwest of Shanghai, it is a highly integrated
petrochemical enterprise which processes crude oil into a broad
range of products in synthetic fibres, resins and plastics,
intermediate petrochemicals and petroleum products. 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 such as: 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, the risk
that the PRC government's implementation of macro-economic control
measures to curb over-heating of the PRC economy may adversely
affect the company; 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; the
risk of not being able to raise the prices of the Company's
products as is appropriate thus adversely affecting 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. Sinopec Shanghai Petrochemical Company Limited 2006
Annual Results (Prepared under International Financial Reporting
Standards) Consolidated Income Statement (Audited) Year ended 31
December 2006 2006 2005 RMB'000 RMB'000 Turnover 50,599,485
45,955,903 Less: Sales taxes and surcharges (681,362) (765,689) Net
sales 49,918,123 45,190,214 Other income 282,142 632,820 Cost of
sales (49,182,232) (42,887,742) Gross profit 1,018,033 2,935,292
Selling and administrative expenses (521,990) (444,449) Other
operating income 297,394 238,611 Other operating expenses: Employee
reduction expenses (83,603) (109,410) Others (156,927) (92,084)
Profit from operations 552,907 2,527,960 Share of profits /
(losses) of associates and jointly controlled entities 576,682
(60,968) Net financing costs (165,389) (179,398) Profit before
taxation 964,200 2,287,594 Taxation (53,238) (366,300) Profit after
taxation 910,962 1,921,294 Attributable to: Equity shareholders of
the Company 844,407 1,850,449 Minority interests 66,555 70,845
Profit after taxation 910,962 1,921,294 Basic earnings per share
RMB0.12 RMB0.26 Dividends attributable to the year 288,000 720,000
For further information, please contact: Ms. Sally Wong / Ms. Jane
Kun Rikes Communications Limited Tel: +852-2520-2201 Fax:
+852-2520-2241 DATASOURCE: Sinopec Shanghai Petrochemical Company
Limited CONTACT: Ms. Sally Wong or Ms. Jane Kun, Rikes
Communications Limited, +852-2520-2201, Fax: +852-2520-2241
Copyright