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China BlueChemical Ltd. (“China BlueChem” or the “Company,” stock code: 3983), a leading chemical fertiliser and methanol producer in China, has announced its audited annual results for the year ended 31 December 2017.

In 2017, the Company, via coordination of upstream supply, ensured the overall balance of natural gas supply of Hainan base. It also signed the Dongfang 13-2 Gasfield Group Natural Gas Sale and Purchase Agreement, assuring Hainan base has the natural gas resources for long-term development in the future. The Company actively strengthened production operation management, as well as boosted its marketing capability, and saw the production volume and sales volume of urea hitting historical high.

During the year, the Company achieved revenue of RMB9,800 million and gross profit of RMB1,685 million, a year-on-year increase of 15% and 463% respectively. Its profit attributable to owners of the Company was RMB50 million and was able to maintain an optimum financial situation. To repay shareholders for their support, the Board of Directors recommended payment of a final dividends and special dividends of RMB0.07 per share for the year.

In 2017, after a series of earlier reform, the fertiliser industry in the PRC has basically been marketised, coupled with tightening environmental protection standards, continued low utilisation rates of urea and phosphate fertiliser plants, profitability of the industry improved. Affected by domestic economic growth, recovery of oil prices, supply-side reform and higher environmental protection standards, the price of methanol continued to rise. The development of the methanol-to-olefins industry continued to drive demand for methanol.

Mr. XIA Qinglong, Chairman and Executive Director of the Company said, “In response to fierce market competition, the Company strengthened its marketing capability. New value-added products were developed with market demand in mind to expand the compound fertiliser market, and efforts were made to develop international markets. In 2017, both the Company’s production volume and sales volume of urea hit historical high, and sales of methanol, phosphate fertilisers and compound fertilisers were all higher than last year. In addition, the Company’s total annual export volumes of urea and DAP were 488,000 tonnes and 215,000 tonnes, respectively. During the year, the Hainan Fudao Phase I urea plant and the coal-based urea plant of the CNOOC Huahe in Heilongjiang, were operating highly effectively throughout the year with operation rates reaching 109% and 112% respectively. The DYK DAP plant and the coal-based urea plant of CNOOC Huahe broke their own long operation cycle records. The Company also made gains amounting to RMB200 million from the refined wealth management business it started during the year.”

In 2017, through refined management of its production process, the Company was able to run safe and stable operation at its various production plants, and the replacement of key equipment of Hainan Fudao Phase II urea plant was completed. During the year, the Company’s production volume of urea reached 2.271 million tonnes and sales volume of urea increased by 13% year-on-year to 2.279 million tonnes. Revenue from urea amounted to RMB3,330 million. The Company produced in all 1.535 million tonnes of methanol and sold 1.533 million tonnes, recording revenue of RMB3,460 million. The production volume of phosphate and compound fertilisers amounted to 0.944 million tonnes and sales volume reached 0.968 million tonnes, bringing in revenue of RMB2,070 million.

Mr. XIA concluded, “Looking ahead, the PRC government will insist on giving priority to agricultural development. The intense competition in the domestic fertiliser market and rising environmental protection restrictions will speed up ousting of backward capacities. The development of methanol-to-olefin and alternative energy will turn into driving forces of methanol demand.

In 2018, the Company will continue to enhance and improve HSE and refined production management, and ensure the smooth completion of the planned overhaul of each production plant on schedule and achieve the successful put-into-use of natural gas from the Dongfang 13-2 Gasfield in Hainan, continue to optimize the product structure, and increase the production and sales of NPK and value-added fertilisers, continue to intensify reformation of the marketing system, and steadily carry forward materialization of the marketing business, and also on further cost reduction, quality-improvement and efficiency-enhancement as well as promote the structural reformation of purchasing management, and continue the feasibility studies of producing high-end chemical products with natural gas in Hainan, while continue to look for organic growth and merger and acquisition opportunities in China and overseas that fit the Company’s development strategy.”

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