30th Sep 2014 11:08
LONDON (Alliance News) - China New Energy Ltd Tuesday said it narrowed its pretax loss in the first half of 2014, but amid a steep fall in revenue, as it continues to be hit by a slowdown in demand for ethanol.
The engineering and technology company for the bioenergy sector posted a smaller pretax loss of CNY4.5 million for the half-year ended June 30, compared with a loss of CNY5.4 million a year earlier, but only due to lower cost of sales as revenue in the period dropped to CNY16.4 million, down from CNY20.2 million in the first half of 2013. Its reduced loss also was supported by lower finance, selling and distribution expenses.
Due the cyclical nature of the business, the company said it historically makes a loss in the first half of the year as most projects are completed and paid for in the second half of the year.
Back in May, the company said its swung to a big pretax loss in 2013, as a slowdown in sales from biorefineries in developed countries forced the company to change focus towards emerging markets. During the year, it also was hit by various impairment charges to its investments.
China New Energy said Tuesday that looking further ahead, it remains confident, but with current volatility in the bioethanol market it is still cautious.
"After the recent volatility in the global financial markets and the downturn in the bioethanol market, there is a risk that the group may continue to face difficult trading conditions. As a result the board maintains its cautious approach to business. Nevertheless, the board remains positive about the group's prospects and outlook within the biofuel industry," said Chairman Yu Weijun in the company's statement Tuesday.
The company said its focus during the first half of the year was to develop its pipeline of international projects. It said it also secured several small contracts for its products and services in China's domestic market.
"We expect for work on our second bioethanol project in Thailand to commence this year or in early 2016. We continue to make progress in Europe and Africa and expect that planning consent for our projects in Hungary and Nigeria will be granted and that these projects will commence in 2015," said Weijun.
China New Energy shares were trading 5.3% lower Tuesday midday at 1.35 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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