20th Sep 2013 08:51
LONDON (Alliance News) - Haike Chemical Group Ltd Friday said its loss widened in the first half as feedstock prices rose for both its refinery and specialty/salt chemicals divisions, but it expects a better second half as it implements a new pricing mechanism and sells and markets products more aggressively.
The China-based chemical and biochemical business posted pretax losses of CNY321.2 million for the period ended 30 June, compared with a loss of CNY203.2 million a year earlier, even though revenue almost tripled to CNY14.41 billion, from CNY5.41 billion, mainly driven by a sales volume increase in both the refinery and chemical divisions.
Revenue for the refinery division grew 132.5% year-on-year, while chemicals rose 462.4% year-on-year.
Refinery revenue grew despite incurring large losses due to low utilisation rate, as a result of unfavourable feedstock prices. To compensate for the shortfall in utilisation rates, the firm increased trading of refined products and speciality chemicals which increased the overall revenues.
"The first half performance was disappointing. Unfavourable feedstock prices and oversupply have lowered overall utilisation and squeezed the profitability of most of our existing products," Executive Chairman Xiaohong Yang.
"We expect the second half performance to improve following the launch of the new pricing mechanism and more aggressive sales and marketing efforts made across all business lines," he added.
Haike Chemical shares were trading at 21.50 pence Friday morning, down 0.50 pence, or 2.3%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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