Sinopec Shanghai warns of Q1 losses - ResearchInChina

Date:2008-04-09liaoyan  Text Size:
SINOPEC Shanghai Petrochemical Co said yesterday that net profits in 2007 almost doubled but it expected a loss in the first quarter of this year.

The company earned 1.63 billion yuan (US$232.8 million) last year, against 844.4 million yuan in 2006, based on international accounting standards, the company reported. Turnover grew 8.69 per cent to 54.25 billion yuan.

Chairman Rong Guangdao said that strong domestic economic growth and a cyclical peak of the continuing global petrochemical industry boom last year enabled China's petrochemical industry to overcome negative impacts such as rising crude prices.

Located in Shanghai's Jinshan District, the company is a unit of Asian refiner Sinopec Corp and an integrated petrochemical enterprise which produces a broad range of products such as synthetic fibers, resins and plastics, intermediate petrochemicals and petroleum products.

In a separate statement, Sinopec Shanghai said it would post a loss in the first quarter this year on soaring international crude prices, despite state subsidies for its refining losses.

The company, a major refiner and ethylene maker, posted a 1.07 billion yuan net income for the first quarter in 2007 in accordance with Chinese accounting rules.

In China, prices for refined oil products such as gasoline and diesel are set by the government to check inflation. Sinopec Shanghai said last month it received 93.9 million yuan in subsidies from the government for last year and 247.28 million yuan for the first quarter this year.

"With domestic petroleum product prices under stringent state control, there has been a severe mismatch between petroleum product prices and crude oil prices," said Sinopec Shanghai, adding that this had resulted in a substantial loss for the company's oil processing operation.

Sinopec Shanghai fell 1.08 percent to 9.12 yuan in Shanghai trading and dropped 3.38 percent to HK$2.86 (36.7 US cents) in Hong Kong.

Meanwhile, Sinopec Yizheng Chemical Fiber Co, Sinopec Shanghai's sister company and a polyester maker, posted 2007 net income of 22.31 million yuan, down 44.86 percent, due to rising crude costs and weak product prices due to overcapacity in the market.

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