2nd Nov 2007 10:24
HaiKe Chemical Group Ltd.02 November 2007 HaiKe Chemical Group Ltd. Trading update HaiKe Chemical Group Ltd ("HaiKe" or the "Company"), the AIM quoted (AIM: HAIK)petrochemical, speciality chemical and biochemical business based in China, ispleased to provide an update on current trading and highlights from theCompany's third quarter trading results. HaiKe will be announcing its detailedresults for the quarter ended 30 September 2007 on 19 November 2007. Current trading HaiKe notes and welcomes the announcement by the PRC National Development andReform Commission ("NDRC") on 31 October 2007, stating that the Chinesegovernment has increased the guideline selling prices for certain refinedpetrochemical products from 1 November 2007. During the period from 1 July to 31 October 2007, the business continued totrade well despite the challenging environment caused by increasing crude oilprices. The Directors are confident that following the NDRC announcementregarding the easing of pricing restrictions, margin improvements should be seenin an already profitable business. The Company's unaudited revenues for the nine months ended 30 September 2007were US$257 million, a 54% increase over the same period last year. Unauditedprofit after tax for the nine months ended 30 September 2007 was approximatelyUS$12.5 million (after AIM admission costs of approximately $1.8 million), a238% increase over the same period last year. Profit attributable to HaiKeshareholders for the period was approximately US$8.7m generating earnings pershare for the nine months ended 30 September 2007 of US$0.24. Despite the continued increase in crude oil prices and the Chinese governmentrestrictions on the selling prices for refined petrochemical products which werein place throughout the third quarter, the Company's petrochemical business hascontinued to trade profitably, generating profits before income tax ofapproximately US$1.7 million in the three months to 30 September 2007 and US$7.9million in the nine months to 30 September 2007. As previously stated theCompany has adopted a number of countermeasures to minimise the impact of thepricing regime. The Company has shifted production to higher margin products andrestricted production in those areas most affected by the pricing environment,in addition to adopting a series of stringent cost control measures. The construction of the 800,000 metric tonne heavy oil catalytic crackingfacility is on schedule and is expected to be fully operational in December2007. This facility will enable the Company to focus on producing higher marginproducts that use mainly residual oil and petrolatum oil feedstock, the pricesof which are considerably less volatile than crude oil. HaiKe's speciality chemical and biochemical businesses continue to trade in linewith expectations and further growth is expected during the remainder of theyear. The chemical product businesses generated profits before income tax ofapproximately US$2.7 million in the three months to 30 September 2007 and US$7.1million in the nine months to 30 September 2007. The outlook for 2008 and beyondfor the speciality and biochemical businesses remains very positive, boosted bythe capacity expansion projects that have been previously announced. Mr. Yang Xiaohong, Executive Chairman, said: "We have continued to see strong growth across all areas of the business,despite the global increase in the price of crude oil. Additionally theannouncement this week by the PRC National Development and Reform Commission toallow price adjustments for certain refined products is very encouraging. Nevertheless, the countermeasures we have already adopted have ensured that theimpact of the high crude oil prices has been minimised and together with therecently announced changes to pricing restrictions means that the petrochemical business should remain profitable in both the short and longer term. Thecontribution from the heavy oil catalytic cracking facility from December willalso assist the repositioning of our petrochemical business to higher margin products. The performance and growth of our speciality chemical and biochemical businessescontinues in line with our expectations and the capacity expansion projectsannounced in September 2007 will further shift the weighting of our Company tothis area where we see significant opportunities to deliver further growth andincrease shareholder value." For further information please contact: HaiKe Johnson Lau, Chief Financial Officer +86 (0) 546 8289173HansonWesthouse Tim Metcalfe / Anita Ghanekar +44 (0) 20 7601 6100Cardew Group Rupert Pittman / Shan Shan Willenbrock +44 (0) 20 7930 0777 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Haike Chemical Group