1st May 2015 09:00
LONDON (Alliance News) - HaiKe Chemical Group Ltd Friday reported a profit from continuing operations in 2014 following the disposal of loss-making businesses and upon improving its product mix to focus on higher-margin products.
The specialty chemical business reported a pretax profit from continuing operations of CNY8.7 million, having reported a pretax loss of CNY10.2 million in 2013. This came despite a slight decline in revenue to CNY973.3 million, down from CNY981.5 million the year before.
HaiKe said that during an economic slowdown in China and sluggish market conditions for specialty chemicals, its profitability was helped by improving product mix to focus more on higher-margin products. As a result, sales volumes decreased but overall margins were maintained.
A major restructuring completed in the first half of the year and which resulted in the disposal of its loss-making discontinuing operations, meant the company no longer suffers from the fluctuation and uncertainties associated with the refinery business, HaiKe said. The loss from the discontinuing operations before their disposal narrowed to CNY369.8 million from CNY784.2 million.
HaiKe said that in view of the overall loss-making position, it does not recommend a dividend for 2014. HaiKe's loss after tax, including the discontinued operations, was CNY362.3 million, narrowed from CNY795.2 million in 2013.
The company said it has made revenue of CNY199.5 million for the first three months of 2015, down from the CNY257.7 million made in the first three months of 2014. Net profit was CNY0.5 million, an improvement on the CNY1.3 million loss in the same period last year, which it said was due to continued improvement in product mix and cost saving initiatives.
HaiKe expects earnings for the rest of the year to stabilise following an improvement in the economic environment, it said.
"We expect the specialty chemical business to stabilise in the coming months, however with existing facilities and resources the upside potential is limited. The company is evaluating new business opportunities, as well as formulating an appropriate business strategy and earnings model, in order to achieve sustainable growth in the medium to long term," Chairman Xiaohong Yang said in a statement.
Shares in HaiKe fell 13% to 20.00 pence Friday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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